Question 8)

Which of the following is/are TRUE?

I. A change in the current yield always signals change in the opposite direction as the yield to maturity.

II. The major disadvantages of long-term debt include the increased financial risk of the firm resulting from the use of debt.

III. In reading price quotes on U.S. Treasury bills, the bid and asked prices indicate the annualized percentage premium from the maturity value.

A. I only

B. I and III

C. II only

D. III only

E. II and III

Question 9)

Bunge, Inc. issued a 30-year bond which is callable in 21 years. It has a coupon rate of 7.725% payable annually, has a call premium of $128, and is currently selling for $872. What is the yield to call?

A. 9.11%

B. 9.35%

C. 9.07%