Question
1. Initial public offerings (IPO) most likely occur in the: A. Secondary market. B. Initial market. C. Primary market. D. Opportunity market. 2. The yield
1. Initial public offerings (IPO) most likely occur in the:
A. Secondary market.
B. Initial market.
C. Primary market.
D. Opportunity market.
2. The yield to maturity on a bond is:
A | Lower than the coupon rate when the bond sells at a discount, and equal to the coupon rate when the bond sells at a premium. | |
B | The discount rate that will establish the present value of the payments equal to the current bond price. | |
C | Based on the assumption that payments received are reinvested at the coupon rate of return. | |
D | Always equal to the coupon rate when the bond sells at a discount. |
3. Disadvantages of issuing bonds most likely includes:
A | Interest paid by the issuing corporation on bonds is a deductible expense for the corporation for federal income tax purposes. | |
B | Bonds (debt) can increase the return on equity through favorable leverage. | |
C | Bonds typically require payment of both periodic interest and maturity value. | |
D | Bonds impact shareholder control. |
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