Which statement is true? A Given a change in market interest rate, bonds with hi
ID: 2706380 • Letter: W
Question
Which statement is true?
A Given a change in market interest rate, bonds with high coupon rates have greater price change than bonds with low coupon rates.
B The total value of a bond is equal to the interest payments plus the present value of the face amount.
C Given a change in market interest rate, longer term bonds have greater price change than shorter term bonds.
D A bond that is selling at discount has yield to maturity lower than the coupon rate.
Kramerica Industries has bonds with face value of $1,000 on the market making semiannual payments, with 10 years to maturity, and selling for $1,223.47. At this price, the bonds yield 6%. What is the coupon rate on Kramerica's bonds?
A 8 %
B 7%
C 9%
D 6%
Which one of the following is correct concerning the rules related to project analysis?
A The average accounting return calculated as a percentage of the sales generated by a project is the primary method in analyzing independent projects.
B The discounted payback period is biased towards long-term projects while the payback period is biased towards short-term projects.
C The net present value is less useful than the profitability index when comparing mutually exclusive project.
D A project with investing type cash flows is acceptable if its internal rate of return exceeds the required return.
Macrogates Industries bond has a 10% coupon rate and a $1,000 face value. Interest is paid annually, and the bond has 20 years to maturity. If investors require a 10% yield, what is the bond's value?
A $813
B $1123
C $1,000
D $849
Which of the following statements is true?
A The cash flows of a new project that result from a reduction in the cash flows from a firm's existing projects are called spillover effect.
B The most valuable alternative that is forfeited if a particular investment is undertaken is called a marginal cost.
C A pro forma financial statement is a financial statement that expresses all values as a percentage of either total assets or total sales.
D The change in a firm's future cash flows resulting from adding a new project is referred to as residual cash flows.
A Given a change in market interest rate, bonds with high coupon rates have greater price change than bonds with low coupon rates.
B The total value of a bond is equal to the interest payments plus the present value of the face amount.
C Given a change in market interest rate, longer term bonds have greater price change than shorter term bonds.
D A bond that is selling at discount has yield to maturity lower than the coupon rate.
Which statement is true? Kramerica Industries has bonds with face value of $1,000 on the market making semiannual payments, with 10 years to maturity, and selling for $1,223.47. At this price, the bonds yield 6%. What is the coupon rate on Kramerica's bonds? Which one of the following is correct concerning the rules related to project analysis? Macrogates Industries bond has a 10% coupon rate and a $1,000 face value. Interest is paid annually, and the bond has 20 years to maturity. If investors require a 10% yield, what is the bond's value? Which of the following statements is true?Explanation / Answer
A Given a change in market interest rate, bonds with high coupon rates have greater price change than bonds with low coupon rates.
D A project with investing type cash flows is acceptable if its internal rate of return exceeds the required return.
A The cash flows of a new project that result from a reduction in the cash flows from a firm's existing projects are called spillover effect.
A Given a change in market interest rate, bonds with high coupon rates have greater price change than bonds with low coupon rates.
7%
D A project with investing type cash flows is acceptable if its internal rate of return exceeds the required return.
1123
A The cash flows of a new project that result from a reduction in the cash flows from a firm's existing projects are called spillover effect.
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