Question

a
company wants to raise 30 million dollars to build a new
headquarter. It will fund this by issuing a 10-year bond with a
face value of $1,000 and a coupon rate of 6.3% paid semiannually.
the table below shows the yield to maturity for similar 10-year
corporate bonds of different ratings. Which of the following is
closest to how many more bonds the company would have to sell to
raise this money if their bonds received a BBB rating rather than
an A rating?

Table: AAA CORP: 62%

AA CORP: 6.4%

A CORP: 6.7%

BBB CORP: 7.0%

BB CORP: 7.5%

A. 937

B. 1093

C. 680

D.781

Answer #1

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HMK Enterprises would like to raise $10.0 million to invest in
capital expenditures. The company plans to issue five-year bonds
with a face value of $1,000 and a coupon rate of 6.59% (annual
payments). The following table summarizes the yield to maturity
for five-year (annual-payment) coupon corporate bonds of various
ratings.
Rating
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A
BBB
BB
YTM
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HMK Enterprises would like to raise $10 million to invest in
capital expenditures. The company plans to issue five-year bonds
with a face value of $1000 and a coupon rate of 6.5% (annual
payments). The following table summarizes the yield to maturity for
five-year (annual-pay) coupon corporate bonds of various
ratings:
Rating
AAA
AA
A
BBB
BB
YTM
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raise $10 million to invest in capital expenditures. The company
plans to issue five-year bonds with a face value of $1000 and a
coupon rate of 6.5% (annual payments). The following table
summarizes the yield to maturity for five-year (annual pay) coupon
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Rating
AAA
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YTM
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