If a firm raises capital by selling new bonds, the buyer is called the "issuing firm" and the coupon rate is generally set equal to the firm's required rate.

Question

Quizplus · Accepted Answer

The buyer is not called the "issuing firm" but rather the "bondholder" or "lender". The coupon rate may or may not be set equal to the firm's required rate, depending on market conditions and the firm's perceived creditworthiness.

If a Firm Raises Capital by Selling New Bonds, the Buyer