Whitts BBQ would like to issue some 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 sell bonds at par, the coupon rate must be set equal to the yield to maturity on comparable bonds, which in this case is 9.50 percent.

Whitts BBQ Would Like to Issue Some Semiannual Coupon Bonds