Your company currently has 5.5% coupon-rate bonds (coupons are paid semi-annually) with ten years to maturity and aprice of $1087. If you want to issue new 10-year coupon bonds at par, what coupon rate do you need to set? (Assumethat for both bonds, the next coupon payment is due in exactly 6 months.)You need to set a coupon rate of %. (Round to two decimal places.)

Bonds are the company's liabilities issued to raise the funds required to finance the company's…

Answered: You need to set a coupon rate of %.…

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You need to set a coupon rate of %. (Round to two decimal places.)

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

Your company currently has 5.5% coupon-rate bonds (coupons are paid semi-annually) with ten years to maturity and a
price of $1087. If you want to issue new 10-year coupon bonds at par, what coupon rate do you need to set? (Assume
that for both bonds, the next coupon payment is due in exactly 6 months.)
You need to set a coupon rate of %. (Round to two decimal places.)

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