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8 March, 07:44

How does a bond issuer decide on the appropriate coupon rate?

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  1. 8 March, 09:00
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    Bond issuers look at outstanding bonds of similar maturity and risk. The yields on such bonds are used to establish the coupon rate necessary for a particular issue to initially sell for par value. Bond issuers also simply ask potential purchasers what coupon rate would be necessary to attract them. The coupon rate is fixed and simply determines what the bond’s coupon payments will be.
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