A firm issues $30,000,000 of 10-year bonds and receives $29.5 million in cash. Which of the...
A firm issues $30,000,000 of 10-year bonds and receives $29.5 million in cash. Which of the following statements is correct?
a. The bonds do not have a coupon rate because they
are zeros.
b. The market rate exceeds the coupon rate.
c. The contract rate exceeds the market rate.
d. The bonds were issued at par.
Homework Answers
Since the face value of the bond is more than the issue price hence the bond is issued at discount.
Now when the bond is issued at discount the market rate is more than the coupon rate.
So Option B is answer
Add Answer to:
A firm issues $30,000,000 of 10-year bonds and
receives $29.5 million in cash. Which of the...
Malfoy issued 10-year bonds with a maturity value of $600 million. Which of the following statements is...
Malfoy issued 10-year bonds with a maturity value of $600 million. Which of the following statements is true if the bonds were issued at a premium? a. The yield rate of interest exceeded the coupon rate b. The cash rate of interest exceeded the coupon rate c. The yield rate of interest was less than the coupon rate d. The yield rate of interest was greater than the rate on equivalent risk-rated bonds
12. Eaton Company issued $5 million of bonds with a 10 % coupon rate of interest....
12. Eaton Company issued $5 million of bonds with a 10 % coupon rate of interest. When Eaton issued the bonds, the market rate of interest was 10 %. Which of the following statements is incorrect? a) The bonds were issued at par. b) Annual interest expense will equal the company's annual cash payments for interest. The book value of the bonds will decrease as cash interest payments are made. c) d) Annual interest expense is the same regardless of...
A firm issues two bonds with 20-year maturities. Both are callable at $1,050. The first bond...
A firm issues two bonds with 20-year maturities. Both are callable at $1,050. The first bond is issued at a deep discount to par with a coupon rate of 4% and a price of $580 to yield 8.4%. The second is issued at par with a coupon rate of 8.9%. What is the yield-to-maturity of the par bond? If you expect rates to fall substantially in the next 2 years, which bond would you prefer to hold? In what sense...
A firm issues 5175 million in straight bonds at par and a coupon rate of 7%....
A firm issues 5175 million in straight bonds at par and a coupon rate of 7%. The firm pays fees of 45% on the face value of the bonds. What is the net amount of funds that the debate will provide for the firm? O A. $167 million OB. 5184 milion OC. $159 million OD $175 milion
11. Eaton Company issued $5 million of bonds with a 10% coupon rate of interest. When...
11. Eaton Company issued $5 million of bonds with a 10% coupon rate of interest. When Eaton issued the bonds, the market rate of interest was 11 %. Wwhich of the following statements is correct? a) The bonds were issued at a premium. b) Annual interest expense will exceed the company's actual cash payments for interest c) Annual interest expense will be $500,000. d) The book value of the bond will decrease as the bond matures.
please provide ste by step analysis 19. A firm issues two-year bonds with a coupon rate...
please provide ste by step analysis
19. A firm issues two-year bonds with a coupon rate of 6.7%, paid semiannually. The credit spread for this firm's two vear debt is 0.8%. New two-year Treasury notes are being issued at par with a coupon rate of 3.1%. What should the price of the firm's outstanding two-year bonds be per $100 of face value?
1. A firm is considering selling $30 million worth of 30-year, 9% coupon bonds with a par-value o...
1. A firm is considering selling $30 million worth of 30-year, 9% coupon bonds with a par-value of $1,000. Because bonds with similar risk earn a return greater than 9%, the firm must sell the bonds for $980 to compensate for the lower coupon interest rate. The flotation costs are 3% of par. The firm is also considering an issuance of 300,000 shares of 10% preferred stock that they expect to sell for $82 per share. The cost of issuing...
State Street Beverage Company issues $812,000 of 8%, 10-year bonds on March 31, 2017. The bonds...
State Street Beverage Company issues $812,000 of 8%, 10-year bonds on March 31, 2017. The bonds pay interest on March 31 and September 30. Which of the following statements is true? O A. If the market rate of interest is 9%, the bonds will issue at a premium. OB. If the market rate of interest is 9%, the bonds will issue at par. OC. If the market rate of interest is 9%, the bonds will issue above par. OD. If...
Weismann Co. issued 11-year bonds a year ago at a coupon rate of 10 percent. The...
Weismann Co. issued 11-year bonds a year ago at a coupon rate of 10 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 10 percent, what is the current bond price? Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 8 years to maturity,...
1) Calculate the WACC for this company. $30,000,000 par value of 20-year bonds issued in 2007...
1) Calculate the WACC for this company. $30,000,000 par value of 20-year bonds issued in 2007 (today is 2018) paying 8% in interest Market rate for similar bonds is 6% 750,000 shares of preferred stock, market price = $30, dividend = $2.50 1,500,000 shares of common stock, market price = $20, dividend next period = $.75, expected growth rate = 10%, risk free rate = 4%, market premium = 12%, Beta = 1.21 Company’s tax rate = 40%
12. Eaton Company issued $5 million of bonds with a 10 % coupon rate of interest. When Eaton issued the bonds, the market rate of interest was 10 %. Which of the following statements is incorrect? a) The bonds were issued at par. b) Annual interest expense will equal the company's annual cash payments for interest. The book value of the bonds will decrease as cash interest payments are made. c) d) Annual interest expense is the same regardless of...
A firm issues 5175 million in straight bonds at par and a coupon rate of 7%. The firm pays fees of 45% on the face value of the bonds. What is the net amount of funds that the debate will provide for the firm? O A. $167 million OB. 5184 milion OC. $159 million OD $175 milion
11. Eaton Company issued $5 million of bonds with a 10% coupon rate of interest. When Eaton issued the bonds, the market rate of interest was 11 %. Wwhich of the following statements is correct? a) The bonds were issued at a premium. b) Annual interest expense will exceed the company's actual cash payments for interest c) Annual interest expense will be $500,000. d) The book value of the bond will decrease as the bond matures.
please provide ste by step analysis
19. A firm issues two-year bonds with a coupon rate of 6.7%, paid semiannually. The credit spread for this firm's two vear debt is 0.8%. New two-year Treasury notes are being issued at par with a coupon rate of 3.1%. What should the price of the firm's outstanding two-year bonds be per $100 of face value?
State Street Beverage Company issues $812,000 of 8%, 10-year bonds on March 31, 2017. The bonds pay interest on March 31 and September 30. Which of the following statements is true? O A. If the market rate of interest is 9%, the bonds will issue at a premium. OB. If the market rate of interest is 9%, the bonds will issue at par. OC. If the market rate of interest is 9%, the bonds will issue above par. OD. If...
Weismann Co. issued 11-year bonds a year ago at a coupon rate of 10 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 10 percent, what is the current bond price? Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 8 years to maturity,...
Most questions answered within 3 hours.
-
Hydrobromic acid
dissolves solid iron according to the followiaung reaction:
Fe(s)+2HBr(aq)→
FeBr2(aq)+ H2(g)
Part A. What...
asked 1 hour ago -
Verify the following vector identity in SPHERICAL
COORDINATES.
div(curl(A)) = 0
asked 2 hours ago -
The work function (Φ) for a metal is 7.50×10-19 J.
What is the longest wavelength (nm)...
asked 3 hours ago -
1. Would the following procedural changes cause the
calculated mass percent Ni2+ ion in Ni(NH3)nCl2 to...
asked 5 hours ago -
1. Why does the voltage of the capacitor vary with frequency?
where does this missing voltage...
asked 6 hours ago -
p p please write each step out clearly
3. A manager of a company is considering...
asked 5 hours ago -
On October 1, Ebony Ernst organized Ernst Consulting; on October
3, the owner contributed $83,540 in...
asked 6 hours ago -
A.)As an electron moves through a region of space, its speed
decreases from 9.60 × 106...
asked 6 hours ago -
In java with the netbeans program do:
Through object programming
Create a class "ContadorP", which is...
asked 6 hours ago -
Pattern Corporation acquired all of Science
Company's outstanding stock on January 1, 2016 for $600,000 cash....
asked 6 hours ago -
Here are all accounts Tyler Co. maintains.
Tax expenses $4,750
Common stocks $48,840
SG&A expenses $2,500...
asked 7 hours ago -
Lis
out the types and equation of wind profile and the respective
variables in the fds...
asked 7 hours ago