The Dairy Delight wants to raise $1.0 million by selling some coupon bonds at par.Comparable bonds in the market have a 6.5 percent annual coupon,15 years to maturity,and are selling at 98 percent of par.What coupon rate should The Dairy Delight set on its bonds?

Question

Quizplus · Accepted Answer

Since the current market yield on comparable bonds is 6.72 percent, The Dairy Delight should set its coupon rate at 6.72 percent if it wants its bonds to sell at par.

The Dairy Delight Wants to Raise $1