Question
ABC Corporation issues $1m of new 30-year bonds with a coupon interest rate of 6%. The $1m is used to retire (repurchase) $1m of bonds
ABC Corporation issues $1m of new 30-year bonds with a coupon interest rate of 6%. The $1m is used to retire (repurchase) $1m of bonds that have a coupon interest rate of 8%. If at the end of the year their EBIT is unchanged then their OPM (operating profit margin, OPM=EBIT/SALES) will ________, their ROE will ___________ and their TIE will ________. (???? means that the effect cannot be predicted with certainty, given the information provided.) decrease, decrease,increase increase, ???, decrease not change, decrease, increase not change, increase, increase
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