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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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