Ask Question
BusinessBusiness
23 July, 14:45

General Matter's outstanding bond issue has a coupon rate of 10%, and it sells at a yield to maturity of 9.25%. The firm wishes to issue additional bonds to the public at face value. What coupon rate must the new bonds offer in order to sell at face value? (Enter your answer as a percent rounded to 2 decimal places.)

+1
Answers (1)
  1. 23 July, 18:43
    0
    9.25%

    Explanation:

    One quick rule of thumb is that for a bond to issued at par value the coupon rate must equal the yield to maturity, in other words, in order for General Matter to issue the new bond at face value, the coupon rate must be equal to 9.25%, the same as the yield to maturity.

    The above can be verified below:

    If the coupon rate is 9.25%, then the coupon interest would be $92.5 (9.25%*$1000)

    the rate is 9.25%

    face value is $1000

    the pv which is the current price is not known

    nper is the length of time the bond would be issued for is also not known hence it taken as zero

    the price of the bond=-pv (9.2%,0,92.5,1000) = $1000

    price of the bond=par value=$1000
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “General Matter's outstanding bond issue has a coupon rate of 10%, and it sells at a yield to maturity of 9.25%. The firm wishes to issue ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
Positive unplanned inventory investment occurs when actual: a. depreciation is less than expected. b. sales are less than expected. c. depreciation is more than expected. d. sales are higher than expected.
Answers (1)
What does market analysis include
Answers (1)
The new product that Bomak Corp. launched was much inferior to its competitors. To compensate for that, the board asked their PR manager, Dorothy, to come up with a campaign that exaggerates the quality of the product many fold.
Answers (1)
A client is admitted to the hospital with weakness in the right extremities, and speech that is slightly slurred. A diagnosis of brain attack (cerebrovascular accident, CVA) is suspected.
Answers (1)
In terms of strategy making, what is the difference between a one-business company and a diversified company? A. The first uses a business-level strategy, while the second uses a set of business strategies and a corporate strategy. B.
Answers (1)
New Questions in Business
The general ledger of Red Storm Cleaners has the following summary of the transactions for the year: 1. March 12 Provide services to customers, $60,000, of which $21,000 is on account. 2. May 2 Collect on accounts receivable, $18,000. 3.
Answers (1)
General Mills conducted focus groups to collect and interpret data to gain insights into customer preferences and loyalty. Which best describes the process General Mills has used? A. Determining the research design B.
Answers (1)
If the reserve ratio is 10%, and banks do not hold excess reserves, when the Fed purchases $10 million of government bonds, bank reservesA) increase by $10 million and the money supply could eventually increase by $10 million.
Answers (1)
What does a clean kitchen show an inspector about a restaurant? a. a clean kitchen shows that the person in charge is working their shift. b. clean kitchens show that the team is healthy and not sick. c.
Answers (1)
Benjamin Company had the following results of operations for the past year: Sales (16,000 units at $10) $ 160,000 Direct materials and direct labor $ 96,000 Overhead (20% variable) 16,000 Selling and administrative expenses (all fixed) 32,000
Answers (1)
Home » Business » General Matter's outstanding bond issue has a coupon rate of 10%, and it sells at a yield to maturity of 9.25%. The firm wishes to issue additional bonds to the public at face value.
Sign Up Forgot Password?