Question 2
Industrial and Commercial Bank of China (ICBC) is planning to raise $800 million through the issuance of a new corporate bond. The bond indenture states that these bonds will last for 8 years' time and carry a coupon rate of 8% p.a. with payments to investors on a monthly basis. The principal amount receivable at maturity is $100,000. Similar bonds are priced with a yield of 11.125% p.a. compounded annually. If ICBC is planning on issuing the bonds at a discount of 8% off the fair value to entice investors, how many bonds must they issue?
