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A Firm Issues Two-Year Bonds with a Coupon Rate of 6.7

Question 90

Multiple Choice

A firm issues two-year bonds with a coupon rate of 6.7%, paid semiannually. The credit spread for this firm's two-year debt is 0.8%. New two-year Treasury notes are being issued at par with a coupon rate of 3.1%. What should the price of the firm's outstanding two-year bonds be per $100 of face value?


A) $126.40
B) $147.47
C) $84.27
D) $105.34

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