Your firm has a credit rating of A. You notice that the credit spread for five year maturity A debt is 95 basis points left parenthesis 0.95% right parenthesis. Your firm's five year debt has a coupon rate of 6.8% with semi - annual coupons. You see that new five year Treasury notes are being issued at par with a coupon rate of 2.6 %. What should be the price of your outstanding five year bonds per $100 face value.

Your firm has a credit rating of A. You notice that the credit spread for five year maturity A debt is 95 basis points left parenthesis 0.95% right parenthesis. Your firm's five year debt has a coupon rate of 6.8% with semi - annual coupons. You see that new five year Treasury notes are being issued at par with a coupon rate of 2.6 %. What should be the price of your outstanding five year bonds per $100 face value.

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter9: The Cost Of Capital

Section: Chapter Questions

Problem 16P

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