A company releases a five-year bond with a face value of $1,000 and coupons paid semiannually. If market interest rates imply a YTM of 8%, what should be thecoupon rate offered if the bond is to trade at par?A. 8%B. 9%C. 4%D. 7%

F G 10 Rate per month (8%/2) 4.00% 11 Period (NPER) (2*5) 10 12 Face value 1,000…

Answered: A company releases a five-year bond…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A company releases a five-year bond with a face value of $1,000 and coupons paid semiannually. If market interest rates imply a YTM of 8%, what should be the coupon rate offered if the bond is to trade at par? A. 8% B. 9% C. 4% D. 7%