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Lourdes Corporation's 11% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 25 years,...

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Finance

Lourdes Corporation's 11% coupon rate, semiannual payment,$1,000 par value bonds, which mature in 25 years, are callable 3years from today at $1,050. They sell at a price of $1,162.46, andthe yield curve is flat. Assume that interest rates are expected toremain at their current level. What is the best estimate of thesebonds' remaining life? Round your answer to two decimal places.years If Lourdes plans to raise additional capital and wants to usedebt financing, what coupon rate would it have to set in order toissue new bonds at par? Since Lourdes wishes to issue new bonds atpar value, the coupon rate set should be the same as the currentyield on the existing bonds. Since interest rates have risen sincethe bond was first issued, the coupon rate should be set at a rateabove the current coupon rate. Since the bonds are selling at apremium, the coupon rate should be set at the going rate, which isthe YTC. Since the bonds are selling at a premium, the coupon rateshould be set at the going rate, which is the YTM. Since Lourdeswishes to issue new bonds at par value, the coupon rate set shouldbe the same as that on the existing bonds.

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