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FIN 3 4 0 3 Spring 2 0 2 4 Name Roge lio Beltran Exam # 2 Student ID 6 1 9 6 6 7
FIN
Spring
Name Roge lio
Beltran
Exam #
Student ID
A call provision gives bondholders the right to demand, or "call for," repayment of a bond. Typically, companies call bonds if interest rates rise and do not call them if interest rates decline.
A
B
A year bond pays an annual coupon, its YTM is and it currently trades at a premium. Which of the following statements is CORRECT?
A If the yield to maturity increases, then the bond's price will increase.
B The bond's coupon rate is less than
C If the yield to maturity remains at then the bond's price will decline over the next year.
D The bond's current yield is less than
Which of the following statements is CORRECT?
A Convertible bonds generally have lower coupon rates than nonconvertible bonds of similar default risk because they offer the possibility of capital gains.
B Senior debt is debt that has been more recently issued, and in bankruptcy it is paid off after junior debt because the junior debt was issued first.
C A company's subordinated debt has less default risk than its senior debt.
E Junk bonds typically provide a lower yield to maturity than investmentgrade bonds.
Ryngaert Inc. recently issued noncallable bonds that mature in years. They have a par value of $ and an annual coupon of If the current market interest rate is at what price should the bonds sell?
A $
B $
C $
D $
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