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A & Z Corporation plans to issue new bonds at face value of $1,000. In its efforts to price the issue, A & Z has

A & Z Corporation plans to issue new bonds at face value of $1,000. In its efforts to price the issue, A & Z has identified a company of similar risk with an outstanding bond issue that has a 6 percent coupon rate with a maturity of 10 years. This firm's bonds are currently selling for $986. If interest is paid annually for both bonds, what must the coupon rate of A & Z's new bonds be in order for the issue to sell at par?

A.

5.78%

B.

6.88%

C.

6.50%

D.

6.19%

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