[freudling]

A coupon bond is selling for 105.87% of face value. It matures in 5
years. Its yield to maturity is 5.8%. What must the coupon payments be if payments are made i. annually? ii. semi-annually?

So, I have PV=-$1058.70
FV=$1000
Maturity=5 years
YTM=5.8%
P/Y= for i) N=5
P/Y= for ii) N=10

I think I need to figure out the coupon rate, since that will allow me to figure out the coupon payments. Once I have the coupon rate (i.e. 7% or whatever), I just take 7% of $1000 and my payments are $70 per year. But I don't know how to get that coupon rate.

I thought to go:

(PV-FV)/YTM

[turboSPE]

This might help:

Advanced Bond Concepts: Yield and Bond Price

Using that formula, I come up with this (x = coupon rate):

((x*1000)/1058.70)*100% = 5.8%
(x*1000)/1058.70 = 0.58
1000x = 61.4046
x = .0614046
x = 6.14046%

Knowing that, it should be pretty easy to calculate the coupon payment. If you need any more help (or if this is totally wrong ), let me know!

HTH,
turboSPE