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    A 3-year Cingular Wireless bond pays interest of $60 annually and sells for $800. If Cingular Wireless what to issue new 3-year bond at face value, what coupon rate must the bond offer?

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    A 3-year Cingular Wireless bond pays interest of $60 annually and sells for $800. If Cingular Wireless what to issue  new 3-year bond at face value, what coupon rate must the bond offer?

    A bond that sells at the face value has its coupon rate = yield to maturity (YTM)
    Let us first calculate the YTM of the existing bond
    Coupon rate of the existing bond= 6% =60/1000

    It has not been mentioned whether the bonds have a provision for semiannual or annual coupon payments
    Let us asume that the bond makes semiannual payments as most other corporate bonds ...

    Solution Summary

    Calculates the coupon rate on bond.

    $2.19

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