16) Yest Corporation's bonds have a 15-year maturity, a 7% semiannual coupon, and a par value of $1,000. The going interest rate (rd) is 6%, based on semiannual compounding. What is the bond’s price?
Question 16 options:
$1,008.65 |
|
$1,051.34 |
|
$1,024.67 |
|
$1,098.00 |
|
$1,105.78 |
17) Bond rating is a measure of interest rate risk
Question 17 options:
True | |
False |
18) The fisher effect expresses the relationship between coupon rate and yield.
Question 18 options:
True | |
False |
19) Stockholders have voting rights, and creditors do not have voting rights
Question 19 options:
True | |
False |
20) Municipal bonds do not need to pay federal income tax
Question 20 options:
True | |
False |
16)
price of coupon = Coupon payment per period * [1-(1+i)^-n]/i + par value/(1+i)^n
i = interest rate per period
n = number of periods
Price = (70/2) * [1-(1+0.06/2)^-30]/(0.06/2) + 1000/(1+0.06/2)^30
= 1098.00
17)
False, Its a measure of creditworthiness of issuing firm
18)
False, it express the relationship between real return, nominal return and inflation rate
19)
True, Debt does not have any voting rights
20)
True, they are exempt from federal income tax
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