Look back at Table 7 4 and examine United Parcel Service and Telecom Italia Capital bonds that mature in 2013 a If these companies were to sell new $1,000 par value long term bonds, approximately what coupon interest rate would they have to set if they wanted to bring them out at par b If you had $...

a According to Table 74 the yield to maturities for Telecom ...

Look back at Table 7-4 and examine United Parcel Service and Telecom Italia Capital bonds that mature

Question:

Look back at Table 7-4 and examine United Parcel Service and Telecom Italia Capital bonds that mature in 2013.
a. If these companies were to sell new $1,000 long-term bonds, approximately what interest rate would they have to set if they wanted to bring them out at par?
b. If you had $10,000 and wanted to invest in United Parcel Service bonds, what return would you expect to earn? What about Telecom Italia Capital bonds? Based just on the data in the table, would you have more confidence about earning your expected rate of return if you bought United Parcel Service or Telecom Italia Capital bonds? Explain.

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...