What is the coupon payment

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A manufactoring company intends to issue callable, perpetual bonds with an annual coupon payment. The bonds are callable at 1,250. One year interest rates are 11%. 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? What is the coupon payment?

Reference no: EM13298487

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