Answer: 10.6%
Explanation:
The bond is already selling in the market at Par. This means that the current coupon rate is the right one to sell it at if the company wants to sell at par.
We can prove this however.
If the company wants to sell the bonds at par, it will have to issue at a coupon rate that is the equivalent of the Yield to maturity because bonds are issued at par when the YTM and the Coupon rate are equal.
To find the rate, use an excel worksheet or a financial calculator.
Present Value = -1,000
Number of periods = 15 * 2 = 30 semi annual periods
Payment/ PMT = (10.6% * 1,000) / 2 = 106/2 = $53
Future Value/ FV = Par value of $1,000
Rate = 5.3%
Make it an annual figure = 5.3 * 2 = 10.6%
