A)

A bond offers a coupon rate of 12%, paid annually, and has a maturity of 16 years. The current market yield is 14%. Face value is $1,000. If market conditions remain unchanged, what should be the Capital Gains Yield of the bond?

B)

You own a bond with the following features: face value of $1000, coupon rate of 5% (semiannual compounding), and 15 years to maturity. The bond has a current price of $1,115. The bond is callable after 5 years with the call price of $1,050 (i.e.: the call premium is $50). What is the yield to call if the bond is called at 5 years (state as an APR)?

C)

Why do firms borrow capital?

Group of answer choices

Maintain current plant & equipment

Add to plant & equipment to exploit a favorable economic environment.

Both maintain current plant & equipment and add to plant & equipment to exploit a favorable economic environment.

To increase tax payments.

None of these reasons are valid.