ii) The Delta Corporation sells 700 bonds. Each bond has a par value of $1,000. The Bonds are sold on January 1, 2013. The interest rate (coupon rate) listed on the bond is 5%. The bonds pay interest twice per year, June 30th, and December 31st. The bonds are 10-year bonds. The market interest rate (yield) for these types of bonds (debt securities) at the time the bonds are sold (January 1, 2013) is 6% annually.

iii) What will be the impact of following factors on growth rate of the company i.e., will growth increase or decrease? (4 marks)

1. Increase in the inflation rate 2. Economy in which the firm operates is growing very rapidly. 3. Growth potential of the company in a highly competitive business environment 4. Highly efficient management in growing business environment

iv) What is a bond. List and explain some characteristics of a coupon bond?