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Zheng Corporation plans to issue new bonds to finance its expansion plans. In its efforts to price the issue, Zheng Corporation has identified a company
Zheng Corporation plans to issue new bonds to finance its expansion plans. In its efforts to price the issue, Zheng Corporation has identified a company of similar risk with an outstanding bond issue that has an 8 percent coupon rate having a maturity of ten years. This firm's bonds are currently selling for $1,150. If interest is paid semi-annually for both bonds, what must the coupon rate of the new bonds be in order for the issue to sell at par? 5.98% 6.71% 3% 4.5%
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