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The opportunity cost of capital (discount rate) used for valuing a corporate bond is its:

-Yield to maturity

A 12-year bond that pays semi-annually has a coupon rate of 5% and a par value of $100. The yield to maturity is 7%. What is the coupon payment each period?

-$2.50

A 6-year bond with a 6% coupon rate and $1000 par value has a yield to maturity of 6%. Assuming an annual coupon payment, what is the price of the bond?

-$1,000

A 10-year bond with a 7% coupon rate and $100 par value has a yield of 6%.
Which of the following statements is most correct?

-The bond will sell at a premium to par

A 6-year corporate bond has an annual coupon rate of 5%. The bond has a yield to maturity of 3%. Which of the following statements is most correct?
-If market interest rates decline, the price of the bond will increase.
-The bond is currently selling at a price below its par value
-If market interest rates remain unchanged, the bond's price one year from now will be lower than it is today.
-Statements A and B are correct
-Statements A and C are correct

-Statements A and C are correct

A 10-year Treasury bond has a 3% coupon, and a 5-year Treasury bond has a 3% coupon. Both bonds have the same yield to maturity. If the yields to maturity of both bonds increase by the same amount, which of the following statements is most correct?
-The prices of both bonds will decrease by the same amount
-The prices of both bonds will increase by the same amount
-The prices of the two bonds will remain the same
-Both bonds will decrease in price, but the 10-year bond will have
a greater percentage decrease in price than the 5-year bond
-Both bonds will increase in price, but the 10-year bond will have a greater percentage increase in price than the 5-year bond

-Both bonds will decrease in price, but the 10-year bond will have
a greater percentage decrease in price than the 5-year bond

Which one of the following statements is most correct?
-All else equal, long-term bonds have more interest rate risk than short-term bonds
-High-coupon bonds have less interest rate risk than low-coupon bonds with the same yield
and time to maturity
-All else equal, short-term bonds have less reinvestment rate risk than long-term bonds.
-None of the above

-All else equal, long-term bonds have more interest rate risk than short-term bonds

8) Company 1 has bonds in the market that have a coupon of 9%, and company 2 has bonds with a coupon of 8%. The yields to maturity for these bonds are 6% for company 1 and 7% for company 2. One of these bonds is rated BBB and the other is rated BB. What is the likely rating for the bonds from company 1? Explain your answer.

-The bonds from company 1 have the lower yield and are, therefore, viewed as being less risky. So, the likelihood is that these bonds are rated BBB.

Which one of the following statements is most correct?
-Retiring bonds under a sinking fund provision is similar to calling bonds under a call provision in the sense that bonds are repurchased by the issuer prior to maturity
-Callable bonds have less default risk than bonds with the same parameters but no call provision
-Callable bonds sometimes work to the detriment of bondholders and are more likely to be called if yields decrease
-All of the above

-All of the above

Which one of the stakeholders has the highest priority claim on assets in the event of the liquidation of a company?

-Holders of secured bonds

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