Question 6 On March 13th, 2013 the spread between the yield to maturity on Baa r
ID: 2645995 • Letter: Q
Question
Question 6
On March 13th, 2013 the spread between the yield to maturity on Baa rated corporate bonds and the five year treasury was:
100 basis points
200 basis points
400 basis points
30 basis points
Question 8
A bond has a $1,000 par value, makes annual interest payments of $100, has 5 years to maturity, cannot be called, and is not expected to default. The bond should sell at a premium if market interest rates are below 10% and at a discount if interest rates are greater than 10%.
True
False
Question 10
The yield to maturity on the bond with the cusip 855244AD1 is less than the coupon on the bond.
True
False
A firm has a cost of equity of 13 percent, a cost of preferred of 11 percent, and an aftertax cost of debt of 6 percent. Given this, which one of the following will increase the firm's weighted average cost of capital?
Increasing the firm's tax rate
Issuing new bonds at par
Redeeming shares of common stock
Increasing the firm's beta
Increasing the debt-equity ratio
Question 12
A bond has a coupon of 6%. It has a face value of $100. It pays interest semiannually. The bond was issued on March 18th, 2013. The settlement date is March 21st, 2013. The maturity date is 3/23/2023. The first interest payment is June 18th, 2013. The redemption of the bond is $100. The bond is currently selling for 80% of face value. The yield to maturity of the bond is:
6.5%
7.89%
9.08%
10.01%
Question 14
Managers are going to borrow to finance 50% of the value of new assets. The rest will be financed with equity. They have decided that the correct discount rate to value the project is the average of the firm's estimated 15% cost of equity and the after tax cost of debt. The pre-tax cost of the firm's debt is the yield to maturity of bonds the firm is going to issue. The terms of the bonds are:
settlement 5/5/2014
maturity 5/5/2024
rate 10%
pr 100
redemption 100
frequency 2
basis 0
These terms are from the EXCEL function "Yield".
The firm's marginal tax rate is 25%.
The discount rate the firm uses should be:
10.25%
11.25%
10.75%
7.5%
3.7037 points
Question 16
Red Mountain, Inc. bonds have a face value of $1,000. The bonds carry a 7 percent coupon, pay interest semiannually, and mature in 13.5 years. What is the current price of these bonds if the yield to maturity is 6.82 percent?
$989.50
$994.56
$1,015.72
$1,018.27
$1,020.00
Question 16
Red Mountain, Inc. bonds have a face value of $1,000. The bonds carry a 7 percent coupon, pay interest semiannually, and mature in 13.5 years. What is the current price of these bonds if the yield to maturity is 6.82 percent?
$989.50
$994.56
$1,015.72
$1,018.27
$1,020.00
100 basis points
200 basis points
400 basis points
30 basis points
Question 8
A bond has a $1,000 par value, makes annual interest payments of $100, has 5 years to maturity, cannot be called, and is not expected to default. The bond should sell at a premium if market interest rates are below 10% and at a discount if interest rates are greater than 10%.
True
False
Question 10
The yield to maturity on the bond with the cusip 855244AD1 is less than the coupon on the bond.
True
False
A firm has a cost of equity of 13 percent, a cost of preferred of 11 percent, and an aftertax cost of debt of 6 percent. Given this, which one of the following will increase the firm's weighted average cost of capital?
Increasing the firm's tax rate
Issuing new bonds at par
Redeeming shares of common stock
Increasing the firm's beta
Increasing the debt-equity ratio
Question 12
A bond has a coupon of 6%. It has a face value of $100. It pays interest semiannually. The bond was issued on March 18th, 2013. The settlement date is March 21st, 2013. The maturity date is 3/23/2023. The first interest payment is June 18th, 2013. The redemption of the bond is $100. The bond is currently selling for 80% of face value. The yield to maturity of the bond is:
6.5%
7.89%
9.08%
10.01%
Question 14
Managers are going to borrow to finance 50% of the value of new assets. The rest will be financed with equity. They have decided that the correct discount rate to value the project is the average of the firm's estimated 15% cost of equity and the after tax cost of debt. The pre-tax cost of the firm's debt is the yield to maturity of bonds the firm is going to issue. The terms of the bonds are:
settlement 5/5/2014
maturity 5/5/2024
rate 10%
pr 100
redemption 100
frequency 2
basis 0
These terms are from the EXCEL function "Yield".
The firm's marginal tax rate is 25%.
The discount rate the firm uses should be:
10.25%
11.25%
10.75%
7.5%
3.7037 points
Question 16
Red Mountain, Inc. bonds have a face value of $1,000. The bonds carry a 7 percent coupon, pay interest semiannually, and mature in 13.5 years. What is the current price of these bonds if the yield to maturity is 6.82 percent?
$989.50
$994.56
$1,015.72
$1,018.27
$1,020.00
Question 16
Red Mountain, Inc. bonds have a face value of $1,000. The bonds carry a 7 percent coupon, pay interest semiannually, and mature in 13.5 years. What is the current price of these bonds if the yield to maturity is 6.82 percent?
$989.50
$994.56
$1,015.72
$1,018.27
$1,020.00
Explanation / Answer
Quenstion 8 Answer correct option are is true
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.