Lourdes Corporation's 13% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 20 years, are callable 6 years from today at $1,075. They sell at a price of $1,376.15, and the yield curve is flat. Assume that interest rates are expected to remain at their current level. a. What is the best estimate of these bonds' remaining life? Round your answer to the nearest whole number. years b. If Lourdes plans to raise additional capital and wants to use debt financing, what coupon rate would it have to set in order to issue new bonds at par? I. Since interest rates have risen since the bond was first issued, the coupon rate should be set at a rate above the current coupon rate. II. Since the bonds are selling at a premium, the coupon rate should be set at the going rate, which is the YTC. III. Since the bonds are selling at a premium, the coupon rate should be set at the going rate, which is the YTM. IV. Since Lourdes wishes to issue new bonds at par value, the coupon rate should be set the same as that on the existing bonds. V. Since Lourdes wishes to issue new bonds at par value, the coupon rate should be set the same as the current yield on the existing bonds. -Select-

Lourdes Corporation's 13% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 20 years, are callable 6 years from today at $1,075. They sell at a price of $1,376.15, and the yild earve is fot. Astume that interest rates are expected to remsin at their current fevel. a. What is the best estimate of these bonds remaining life? Reund your answer to the nearest whole number. vears b. Ir Lourdes prans to raise addibonal capital and wants to use debt financing, what coupon rate would it have to set in order to lasue new bonds at par? 1. Since interest rates hove rase sinci the bend was first issued, the coupon rate should be set at a fate above the current coupon rate: II. Since the bonds are seling at a premium, the coupon rate should be set at the going rate, which is the VTC. III. Since the bonds are selline at a promlum, the coupon rate should be set at the going rate, which is the YTM. V. Sence Loardes wishes to anve new bonds ot per velue, the coupan rate thould be set the same as the current yield en the existing bonds