5. Your firm has an outstanding bond issue with a coupon rate of 6.2%, and it...
5. Your firm has an outstanding bond issue with a coupon rate of 6.2%, and it sells at a yield to maturity of 4.8%. Your firm wishes to issue additional bonds to the public at face value. What coupon rate must the new bonds offer to sell at face value?
Homework Answers
The Bond must carry the coupon rate which equals to current yield to maturity on existing bonds in order to sell at face value .
When yield to maturity equals coupon rate ,bond sell at par .
Coupon rate on new bonds = 4.80%
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