20. A 20-year bond with a 9% annual coupon has a yield to maturity of 10%. Which of the following statements is correct? a. If the yield to maturity remains constant, the bond's price one year from now will be higher than its current price. b. The bond is selling below its par value. c. The bond is selling at a discount. d. If the yield to maturity remains constant, the bond's price one year from now will be lower than its current price c. 21. Volcano Mining Inc. has an outstanding issue of perpetual preferred stock with an annual dividend of $3.85 per share. If the required return on this preferred stock is 7.2%, then at what price should the stock sell? a. $33.22 b. $46.25 $53.47 d. $62.14 $69.68 22. A bond that is rated AAA is better (i.e. higher quality and lower default risk) than a bond with a CCC bonding rating. Therefore, the better AAA rated bond will have a higher required rate of return and the CCC rated bond will have lower required rate of retum. a True b. False 23. An investor buys an IBM bond for $890 and sells it for $925 in one year. The bond paid coupon interest during the year of S67.25. What is the rate of return on this investment over this period? 4.875% b. 5.110% 11.49% d. 14.750% a. 24. If Di = $3.10, g (which is constant) - 5.2%, and Po-$153.47, and the expected return (rs) = 7.22%, what is the expected dividend yield? 8.31% b. 6.87% c. 4.11% d. 2.02%