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QUESTION
Your company currently has $1,000 par, 5.25% coupon bonds with 10 years to maturity and a price of $1,071.
1. Your company currently has $1,000 par, 5.25% coupon bonds with 10 years to maturity and a price of $1,071. If you want to issue new 10-year coupon bonds at par, what coupon rate do you need to set? Assume that for both bonds, the next coupon payment is due in exactly six months.
