What coupon rate should be set for the new bond

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Reference no: EM132788133

Problem 1: Bozo Inc. has a 10% coupon bond outstanding with 12 years to maturity. The bond makes semiannual coupon payments and is selling in the market for $966.33. It is issuing a new 12-year bond to finance a factory to make new Bozos. The new bond will also make semiannual coupon payments. What coupon rate should be set for this new bond if the company wants to sell it at par (i.e. for $1,000)?

A. 11.00%

B. 10.75%

C. 10.50%

D. 10.25%

E. 11.25%

F. 11.50%

Reference no: EM132788133

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