A company releases a five-year bond with a face value of $1000 and coupons paid semiannually.If market interest rates imply a YTM of 6%,what should be the coupon rate offered if the bond is to trade at par?

Question

Quizplus · Accepted Answer

To trade at par, the coupon rate must equal the yield to maturity (YTM). Since the YTM is 6% annually, the coupon rate should also be 6% annually.

A Company Releases a Five-Year Bond with a Face Value