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How does a bond issuer decide on the appropriate coupon rate to set on its bonds? Explain the difference between the coupon rate and the required return on a bond.
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How does a bond issuer decide on the appropriate coupon rate to set on its bonds?

Explain the difference between the coupon rate and the required return on a bond.

User Worldofjr
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Answer

The answer and procedures of the exercise are attached in the following image.

Explanation

Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.

How does a bond issuer decide on the appropriate coupon rate to set on its bonds? Explain-example-1
User Dudewat
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