Question
QUESTION 2 A) A 12% coupon bond that matures in 6 years is selling for $1,150. What is the bonds: current yield and ytm? Current
QUESTION 2
A)
A 12% coupon bond that matures in 6 years is selling for $1,150. What is the bonds: current yield and ytm?
| Current Yield=8.74%; YTM=10.44% | ||
| Current Yield=10.44%; YTM=8.74% | ||
| Current Yield=9.67%; YTM=12.00% | ||
| Current Yield=12.00%; YTM=9.67% |
B)
A 10% coupon bond that matures in 9 years is selling for $915. What is the bonds: current yield and ytm?
| Current yield=10.00%; YTM=11.34% | ||
| Current yield=11.34%; YTM=10.00% | ||
| Current yield=10.93%; YTM=11.54% | ||
| Current yield=11.54%; YTM=10.93% |
C)
Benny Hill wants to invest $35,000 in bonds. He can buy a corporate bond with a yield of 8 percent or a municipal bond with a yield of 6 percent. Benny is in the 31% marginal tax bracket. Which should he select?
| Choose the Corporate Bond as 8.69% is a better rate than 8.00% (municipal bond) | ||
| Choose the Municipal Bond as 8.00% is a better rate than 8.89% (corporate bond) | ||
| Choose the Municipal Bond as 8.69% is a better rate than 8.00% (corporate bond) | ||
| Choose the Corporate Bond as 8.00% is a better rate than 8.69% (municipal bond) |
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Project Finance In Theory And Practice
Authors: Stefano Gatti
3rd Edition
0128114010, 978-0128114018
