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A company issues 1,000,000 in bonds. The prevailing yield rate on the bonds is 12%. The company considers having coupons at 8% and a maturity
A company issues 1,000,000 in bonds. The prevailing yield rate on the bonds is 12%. The company considers having coupons at 8% and a maturity of 15 years. On second thought, the company decides on a maturity date of 20 years. What coupon rate must the bond issue have in order for the company to raise the same amount of revenue as it would have on the 15-year issue? Suppose the company issued the bonds with a maturity date of 10 years. What coupon rate is required to raise the same amount as under the other two issues?
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