Question 20

The Hot Dog Shack wants to raise $1.2 million by selling some coupon bonds at par. Comparable bonds in the market have a 6.5 percent annual coupon, 15 years to maturity, and are selling at 97.687 percent of par. What coupon rate should The Hot Dog Shack set on its bonds? (assume annual compounding)

Group of answer choices

6.75 percent

6.67 percent

6.38 percent

6.25 percent

6.50 percent