Question
(1)Toyota bonds are currently rated AA, and Ford bonds are rated BB.Suppose the price of $1,000 face value one-year Toyota bond is $970. (a) (2
(1)Toyota bonds are currently rated AA, and Ford bonds are rated BB.Suppose the price of $1,000 face value one-year Toyota bond is $970.
(a)(2 points) What is the rate of return on the one-year Toyota bond?
3.09%
(b)(1 points) Multiple Choice: The price of the Ford bond must be:
(i)Less than $970
(ii)Equal to $970
(iii)Greater than $970
(iv)There is insufficient information to answer this question
(c)(1 points) Multiple Choice: The rate of return on a $1,000 one-year Ford bond must be:
(i)Less than the return on the Toyota bond
(ii)Equal to the return on the Toyota bond
(iii)Greater than the return to the Toyota bond
(iv)There is insufficient information to answer this question
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