Lloyd Corporation’s 14% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 30 years,...

Lloyd Corporation’s 14% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 30 years, are callable 5 years from today at $1,050. They sell at a price of $1,353.54, and the yield curve is flat. Assume that interest rates are expected to remain at their current level. b. If Lloyd plan to raise additional capital and wants to use debt financing, what coupon rate would it have to set in order to issue new bonds at par?

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Expert Solution

COUPON RATE = YTC = 6.47%

jeff jeffy answered 11 months ago

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