Bowdeen Manufacturing intends to issue callable perpetual bonds with annual coupon payments. The bonds are callable at $1, 175. One-year interest rates are 9 percent There is a 60 percent probability that long-term interest rates one year from today will be 10 percent and a 40 percent probability that they will be & percent Assume that if interest rates fall the bonds will be called What coupon rate should the bonds have in order to sett at par value?
Coupon rate at par value %