Question

A Treasury bond is quoted at a price of 101:14 with a current yield of 7.236 percent. What is the coupon rate?
a. 7.20 percentb. 7.28 percentc. 7.30 percentd. 7.34 percente. 7.39 percent

Answer 1

Thank you for posting your question here. The answer is 7.34 percent. Please see below solution:

Price = 101 and 14/32 percent of face = 1.014375 × $1,000 = $1,014.375Annual interest = 0.07236 × $1,014.375 = $73.40Coupon rate = $73.40/$1,000 = 7.34 percent