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Big Time Company is planning to raise $15 million by selling 10-year bonds. The bond rating agency has advised the company that the bonds will
Big Time Company is planning to raise $15 million by selling 10-year bonds. The bond rating agency has advised the company that the bonds will have an A rating. Currently, the difference between the yield to maturity of A-rated corporate bonds over similar-maturity Government of Canada bonds is 150 basis points. If 10-year Canada bonds are currently priced to yield 5 percent, what coupon rate should Big Time select if the new issue is to sell at par value.
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