What coupon rate should the bonds have in oder

Reference no: EM13298407

A company issues callable bonds with 11% one year interest rate annual payments. The bonds are callable at 1,250. There is a 60% probability that long term interest rates one year from today will be at 13% and a 40% probablity that they will be at 9%. Assume that if interest rates fall the bonds will be called. What coupon rate should the bonds have in oder to sell at par value?

Reference no: EM13298407

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