Explore BrainMass

Explore BrainMass

    Calculate Annual Coupon Rate

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    XYZ is contemplating selling some 10-year bonds to raise funds for a planned expansion. The firm currently has an issue outstanding with $60 annual coupon, paid semiannually. These bonds currently sell for $864.10, a discount relative to their $1,000 par value, and they have 10 years remaining to maturity. What coupon rate must the new issue have if it is to sell at par when it is issued?

    © BrainMass Inc. brainmass.com June 3, 2020, 8:43 pm ad1c9bdddf
    https://brainmass.com/business/bond-valuation/calculate-annual-coupon-rate-149935

    Solution Summary

    This posting gives a detailed step-by-step response to the student's question.

    $2.19

    ADVERTISEMENT