Whitts BBQ would like to issue some 10-year, semiannual coupon bonds at par.Comparable bonds have a current yield of 9.16 percent, an effective annual yield of 9.68 percent, and a yield to maturity of 9.50 percent.What coupon rate should Whitts BBQ set on its bonds?

Question

Quizplus · Accepted Answer

To issue bonds at par, the coupon rate should be set equal to the yield to maturity, which is 9.50 percent in this case.

Whitts BBQ Would Like to Issue Some 10-Year, Semiannual Coupon