a firm raises capital by selling new bonds, it is called the "issuing firm," and the coupon rate is generally set equal to the required rate on bonds of equal risk.

Question

Quizplus · Accepted Answer

This statement is true. The coupon rate on a new bond issue is typically set equal to the required rate on bonds of similar risk as determined by the market. This ensures that the bond issue will be attractive to potential investors and that the issuing firm can raise the necessary capital at a reasonable cost.

A Firm Raises Capital by Selling New Bonds, It Is