Corporate Finance - Bonds
Not what you're looking for?
1.
Security: AAA AA A BBB BB
Yield (%) 6.2 6.4 6.7 7.0 7.5
Consolidated Insurance wants to raise $35 million in order to build a new headquarters. The company will fund this by issuing 10-year bonds with a face value of $1,000 and a coupon rating of 6.5%, paid semiannually. The above table shows the yield to maturity for similar 10-year corporate bonds of different ratings. Which of the following is closest to how many more bonds Consolidated Insurance would have to sell to raise this money if their bonds received an A rating rather than an AA rating?
A. 750
B. 1156
C. 686
D. 765
2. The following table summarizes prices of various default-free zero-coupon bonds (expressed as a percentage of face value):
Maturity (years): 1 2 3 4 5
Price (per $100 face value): 94.52 89.68 85.40 81.65 78.35
The yield to maturity for the three-year zero-coupon bond is closest to:
A. 5.4%
B. 5.8%
C. 5.6%
D. 6.0%
Purchase this Solution
Purchase this Solution
Free BrainMass Quizzes
Team Development Strategies
This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.
Employee Orientation
Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.
Marketing Research and Forecasting
The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.
Operations Management
This quiz tests a student's knowledge about Operations Management
Learning Lean
This quiz will help you understand the basic concepts of Lean.