10) The Yeild to maturirty on the bond with the cusip 855244AD1 is less than the

Question

10) The Yeild to maturirty on the bond with the cusip 855244AD1 is less than the coupon on the bond.

True

False

11) 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. Givin this, which one of the following will increase the firsm, weighted average cost of capital?

a) Increasing the firms tax rate

b) Issuing new bonds at par

c) Redeeming shares of common stock

d) Increasing the firms beta

e) Increasing the debt-equity ratio

12) A bond has a coupon of 6%. It has a face value of $ 100. It pays interst semi annually. The bond was issued march 18th 2013. The settlement date is march 21st, 2013. The matururity date is 3/23/23. The first interest payment is june 18th 2013. The redemption of the bond is $100. The bond is currently selling 80% for face value. The yeild of the maturity bond is

a) 6.5

b)7.89

c)9,08

d)10.

18) A $1,000 face value bond currently has a yeild of maturitty of 6.69 percent. The bond matures in 3 years and pays internest annyally. The coupon rate is 7 percent. What is the current price of this bond.

a)948.01

b)949.60

c)1,005.26

d)1,008.18

e)1,010.13

20)

A 5.5 % $1,000 bond matures in 7 years, pays interest semi annually and has a yeild to maturity of 6.23 percent. What is the current market price of the bond?

a) 945.08

b) 947.21

c)959.09

d)959.60

e)962.40

Explanation / Answer

11 ) AS PER CAPM MODEL COST OF EQUITY = RF + (RM - RF) * BETA

WHEN BETA INCRESING THEN COST OF EQUITY WILL INCRESE.

SO ANSWER IS

d) Increasing the firms beta

12) C)9.08 %

18) D)1008.18

20) C)959.09

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.