Question

question 6
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an investor has a debenture valued at r700, with a required rate of return of 15%. calculate the coupon rate.
a. r486
b. r125
c. r105
d. r4667
clear my choice

Explanation:

Step1: Recall the coupon - rate formula

The coupon payment ($C$) can be calculated using the formula $C = r\times P$, where $r$ is the required rate of return and $P$ is the value of the debenture.

Step2: Substitute the given values

Given $P = 700$ and $r=0.15$. Then $C = 0.15\times700$.
$C = 105$

Answer:

C. R105