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Question 15 (3 points) A Disney Corporation Bond with a $1,000 par value can be purchased at a discount today for $908. The original coupon
Question 15 (3 points) A Disney Corporation Bond with a $1,000 par value can be purchased at a discount today for $908. The original coupon was 11%, so the bond pays $110 interest once every year. There are eight years before maturity and Disney will pay $110 each of those eight years and it will pay back the $1,000 par at the end of the eighth year. Why might the bond be selling for less than par (at a Discount") given that Disney will still pay $110 interest each year and $1,000 principal at the end of eight years? a) Disney's stock value has declined because of a business cycle downturn b) Interest rates have increased since the bond was issued c) Interest rates have decreased since the bond was issued d) The bond can be converted into common stock
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