The outstanding bonds of "Field industries" have a 25-year maturity and a $1,000 par value. They have a nominal yield to maturity of 9.25%, pay interest every two years, and are sold for $1,150.
However, the following formula can be used to determine the bond's nominal (annual) coupon interest rate:
FV (the par value of the bond) is $1,000 N= 25 x 2 = 50 periods (since it is a q) i/y=9.25/2=4.63 PV= -850 PMT=? PMT=38.55
Annual coupon payment equals 38.55 x 2 to 77.10
Annual coupon payment/par value = 77.10/1000 = 0.08 or 7.710 Nominal coupon rate
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