19. Zeus Industry issued a bond, which pays coupon interest semi-annually and has 30 years to maturity. Par value is $1,000, the market price is $1,059.34 and the yield to maturity is 7.50%. The bond’s coupon rate is ______%. a. 8.00 b. 8.50 c. 9.00 d. 9.50 e. 10.00
19. Zeus Industry issued a bond, which pays coupon interest semi-annually and has 30 years to maturity. Par value is $1,000, the market price is $1,059.34 and the yield to maturity is 7.50%. The bond’s coupon rate is ______%. a. 8.00 b. 8.50 c. 9.00 d. 9.50 e. 10.00
Chapter6: Bonds (debt) - Characteristics And Valuation
Section: Chapter Questions
Problem 14PROB
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Question
19. Zeus Industry issued a bond, which pays coupon interest semi-annually and has 30 years to maturity. Par value
is $1,000, the market price is $1,059.34 and the yield to maturity is 7.50%. The bond’s coupon rate is ______%.
a. 8.00
b. 8.50
c. 9.00
d. 9.50
e. 10.00
20. Peter Parker Corp. plans to issue a $1,000 par value, semi-annual pay bond with 20 years to maturity and a
coupon rate of 5.50%. The company expects the bonds to sell for $810.00. MC Inc’s cost of debt is estimated
to be _______%.
a. 7.00
b. 7.11
c. 7.21
d. 7.32
e. 7.43
21. LBJ Enterprises is issuing new bonds for a capital budgeting project. The bonds will mature in 20 years and
have a coupon rate of 5.80% with semi-annual coupon payments (assume a par value of $1,000 on the bond).
The current yield-to-maturity for similar bonds is 6.20%. The company hopes to raise $18 million with the
new issue. To raise the debt, how many bonds must the company issue? (Round to the nearest whole number).
a. 18,858
b. 18,104
c. 18,426
d. 19,062
e. 17.992
is $1,000, the market price is $1,059.34 and the yield to maturity is 7.50%. The bond’s coupon rate is ______%.
a. 8.00
b. 8.50
c. 9.00
d. 9.50
e. 10.00
20. Peter Parker Corp. plans to issue a $1,000 par value, semi-annual pay bond with 20 years to maturity and a
coupon rate of 5.50%. The company expects the bonds to sell for $810.00. MC Inc’s cost of debt is estimated
to be _______%.
a. 7.00
b. 7.11
c. 7.21
d. 7.32
e. 7.43
21. LBJ Enterprises is issuing new bonds for a capital budgeting project. The bonds will mature in 20 years and
have a coupon rate of 5.80% with semi-annual coupon payments (assume a par value of $1,000 on the bond).
The current yield-to-maturity for similar bonds is 6.20%. The company hopes to raise $18 million with the
new issue. To raise the debt, how many bonds must the company issue? (Round to the nearest whole number).
a. 18,858
b. 18,104
c. 18,426
d. 19,062
e. 17.992
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