(2 pt question) A 25-year, $1,000 par value bond has an 8.5% annual payment coupon. The bond currently sells for $925. If the yield to maturity remains at its current rate, what will the price be s years from now? $883.61 $744.09 c. $976.62 d. $930.11 $865.00 (TRUE or FALSE) Extracorp's callable, 896, 20-year $1,000 face-value bonds currently sell for $1,1 Based on the price of the bond, ExtraCorp should con at a lower interest rate sider calling the bonds and re-issuing the debt Assuming all else is constant, which of the following statements is CORRECT? ther things held constant, a 20-year zero coupon bond has more reinvestment risk than a 20-year coupon bond Corporations are not permitted to deduct interest paid on bonds from their taxes. Other things hel price due to a given change in the required rate of return is lower in long-term bonds than it is in short-term bonds. For a bond of any maturity, a 1.0 percentage point increase in the market interest rate a. C. ld constant, price sensitivity as measured by the percentage change in ) causes a smaller percentage capital loss than the percentage capital gain stemming from a 1.0 percentage point decrease in the interest rate y is planning to raise $1,000,000 to finance a new plant. Which of the following A compan statements is CORRECT? The company would be especially eager to have a call provision included in the indenture if its management thinks that interest rates are almost certain to rise in the foreseeable future. If debt is used to raise the million dollars, but $500,000 is raised as first mortgage bonds on the new plant and $500,000 as debentures, the interest rate on the first mortgage bonds would be lower than it would be if the entire $1 million were raised by selling first mortgage bonds. If two classes of debt are used (with one senior and the other subordinated to all other debt), the subordinated debt will carry a lower interest rate. If debt is used to raise the illion dollars, the cost of the debt would be lower if the debt b. ere in the form of a fixed-rate bond rather than a floating-rate bond. If debt is used to raise the million dollars, the cost of debt were in the form of a mortgage bond rather than an unsecured term loan. the debt would be higher if the