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Suppose you invested in Company A's bonds, and the company used a large amount of that debt to acquire another firm. (Such a deal is called a leveraged buyout.) This deal led to significant losses for bondholders and had a negative impact on the firm's credit risk. the yield to maturity (YTM) will In such a situation, the company's bond rating is likely to and the value of its outstanding bonds will decrease increase Which of the following are most likely to have higher yields? Convertible bonds Nonconvertible bonds Consider the case of an investor, Nazim: Nazim wants to include bonds in his investment portfolio, but he wants the option to sell the bond to the issuer at a specified price at a certain date before the maturity of the bond. Which of the following bond redemption features should he pick? Convertible bond Retractable bond Nazim also recently bought bonds with a clause stating that interest will be paid based on the inflation rate. When the inflation rate increases, the interest on the bonds will also increase. Nazim has invested in income bonds indexed bonds Yield to maturity (YTM) is the rate of return expected from a bond held until its maturity date. However, the YTM equals the expected rate of return under certain assumptions. Which of the following is one of these assumptions? O The probability of default is zero. O The bond is callable. Consider the case of Blanche Inc. Value Blanche Inc. has 9% annual coupon bonds that are callable and have 18 years left until maturity. The bonds have a par value of $1,000, and their current market price is $1,100.35. However, Blanche Inc. may call the bonds in eight years at a call price of $1,060. What are the YTM and yield to call (YTC) on Blanche Inc.'s bonds? YTM YTC 7.83% 10.46% 6.91% 6.84% If interest rates are expected to remain constant, what is the best estimate of the remaining life . Inc.'s bonds? O 8 years O 5 years O 18 years O 13 years If Blanche Inc. issued new bonds today, what coupon rate must the bonds have to be issued at par