Set the coupon rate on the new bonds

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Reference no: EM132010856

Ford is looking to issue some new 5-year bonds with semi-annual coupon payments. 20 years ago the company issued 25-year bonds at par value with a coupon rate of 9.6%; these bonds also feature semi-annual coupons.

An online quote reveals that these bonds are currently trading for 94% of par value. Based on this price, what should Ford set the coupon rate on the new bonds so that they will be issued at par?

Reference no: EM132010856

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