RAK Co. wants to issue new 20-year bonds for some much-needed expansion projects. The company currently has 6.4 percent coupon bonds on the market that sell for $1,063, make semiannual payments, and mature in 20 years. What coupon rate should the company set on its new bonds if it wants them to sell at par?
RAK Co. wants to issue new 20-year bonds for some much-needed expansion projects. The company currently has 6.4 percent coupon bonds on the market that sell for $1,063, make semiannual payments, and mature in 20 years. What coupon rate should the company set on its new bonds if it wants them to sell at par?
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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Question
![RAK Co. wants to issue new 20-year bonds for
some much-needed expansion
projects. The company currently has 6.4 percent
coupon bonds on the market
that sell for $1,063, make semiannual payments, and
mature in 20 years. What
coupon rate should the company set on its new
bonds if it wants them to sell at
par?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5f63e27b-1826-4bca-b22a-2a838bf5ea4f%2F289146b3-1160-44b5-8d00-28be62587967%2Fknlxh7_processed.jpeg&w=3840&q=75)
Transcribed Image Text:RAK Co. wants to issue new 20-year bonds for
some much-needed expansion
projects. The company currently has 6.4 percent
coupon bonds on the market
that sell for $1,063, make semiannual payments, and
mature in 20 years. What
coupon rate should the company set on its new
bonds if it wants them to sell at
par?
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