The International Publishing Group is raising $10 million by issuing 15-year bonds with a coupon rate of 8

Finance Aug 13, 2020

The International Publishing Group is raising $10 million by issuing 15-year

bonds with a coupon rate of 8.5 percent. Coupon payments will be made annually.

Investors buying the bond currently will earn a yield to maturity of 8.5 percent. At what

price will the bonds sell in the marketplace?

Expert Solution

When yield to maturity and Coupon rate are equal, then bond is selling at par. So, the bond will sell at $1000 per bond. The complete issue will be sold for $10 million.

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