Question: Mega Corp wants to issue bonds and has been advised by its investment banker that, at the current market conditions, Mega Corp could issue at
Mega Corp wants to issue bonds and has been advised by its investment banker that, at the current market conditions, Mega Corp could issue at a spread over CGS yield at +12 basis points (bps) for 2 years, +24bps for 5 years, +47bps for 10 years and +60bps for 15 years. Bloomberg shows that CGS at various terms are trading at a level depicted in the following table: CGS Terms De 2 years 5 years 10 years 15 years Select one: O a. 5.74% Coupon, 2.40% yield O b. 5.50% Coupon; 2.40% yield O c. 5.74% Coupon; 2.16% yield O d. 5.50% Coupon; 5.50% yield O e. 2.40% Coupon; 2.40% yield Coupons Price Yield 1.75% 99.49 1.98% 5.50% 114.63 2.16% 2.25% 97.55 2.53% 4,50% 121.59 2.70% If Mega Corp wants to issue a 5 years bond at par, what would be the coupon rate and the yield
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