Solutions to Chapter 1

7. When the bond is selling at face value, its yield to maturity equals its coupon rate. This firm’s bonds are selling at a yield to maturity of 9.25%. So the coupon rate on the new bonds must be 9.25% if they are to sell at face value. 8. The bond pays a coupon of 7.125% which means annual interest is $71.25. ................
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