D Question 11
5 pts
Pandora Media plans to issue original issue discount (OID) bonds with a 20-year maturity, \$1,000 par value,
and initial yield to maturity of 8\%. Since these bonds are issued below par, the total yield will come from
both annual coupon payments and appreciation. If the bonds are offered at a discounted price of \$880,
what is their nominal coupon rate? That is, at this price, what coupon rate will result in a yield to maturity
of 8\%?
Your answer should be between 5.12 and 8.74, rounded to 2 decimal places, with no special characters.