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 required rate.

Question

Quizplus · Accepted Answer

The buyer is not called the "issuing firm," but rather the "bondholder" or "investor." The coupon rate is not necessarily set equal to the required rate, but rather it is determined based on a variety of factors such as market conditions, credit risk, and the time to maturity of the bond.

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