Question

titan corp. bonds pay an annual coupon rate of 10%. if investors required rate of return ia now 12% on these bonds, they will be priced at

Answer 1

When the investors required rate of return is equal to the annual coupon rate then the bonds are priced at the par value.

When the investors required rate of return is more (as in the above case given of the titan corp. bonds) then the annual coupon rate then the bonds are priced at a discount to the par value.

Therefore in the given case of titan corp. bonds the annual coupon rate is 10% and investors required rate of return is 12%, then the bonds will be priced at a discounted value to the par value.