Find the at-par coupon rate

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Reference no: EM132020074

Suppose a yield curve for 6-month rates is given by the equation j = 0.0125+ 0.003 ln t, t greaterthanorequalto 1 so that the nominal annual rate is i⁽²⁾ = 2j = .025 + 0.006 ln t.

Consider a $1,000 bond that matures in 5 years (10 periods).

Assume the bond pays semiannually.

(a) If the annual coupon rate is 4.0%, compute current price, and then find the yield-to-maturity.

(b) Find the at-par coupon rate.

Reference no: EM132020074

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