The current market interest rate for $1,000,10-year bonds of large corporations in the food industry is 6.3 percent. If a large corporation in the food industry wants to sell $1,000, 10-year bonds with a 4.9% annual interest rate, what type of bond should they consider issuing?

Question

Business

Davon Harmon

9 November, 01:38

The current market interest rate for $1,000,10-year bonds of large corporations in the food industry is 6.3 percent. If a large corporation in the food industry wants to sell $1,000, 10-year bonds with a 4.9% annual interest rate, what type of bond should they consider issuing?

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Answers (1)

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Xiomara Atkinson · Answer 1

Convertible bonds

Explanation:

Since this company wants to issue bonds at a lower rate than the market rate, then they must find a way to convince investors to buy their bonds.

Usually investors are willing to accept lower coupons for convertible bonds. Convertible bonds are bonds that can be converted into common stock in the future.