that is greater than their yield to maturity. Which of the following is true when A) The longer maturity bond has a smaller discount (is priced below par but B) The longer maturity bond has a greater discount (is priced farther below C) The longer maturity bond has a greater premium (is priced farther above D) The longer maturity bond has a smaller premium (is priced above par but 13) Two bonds are identical except for their maturity. The bonds have a coupon rate comparing the two bonds? closer to par) par) par). closer to par). 14) Consider the following balance sheet of a publicly held company: S7,633,500 $14,176,500 $760,000 Long Term Debt Common Stocks Cash Receivables $1,250,000 Inventories $2,225,000 Net Equipment $17,575,000 It is estimated that the yield to maturity on bonds are 9%. The company faces a marginal tax rate of28%. Assume that stock price of this company rises such that it would sell at 1.35 times its book value (amount in the balance sheet) causing its cost ofequity to move to 11.5%. What would be the weighted average cost of capital for this firm? A)9.31% B) 8.41% C) 9.91% D) 10.07% 15) Valley Manufacturing Inc. just issued $1,000 par 20-year bonds. The bonds sold for $758.18 and pay interest semiannually. Investors require a rate o bonds. What is the bonds' annual coupon rate? A) 6% B)7% C) 8% f 9% on the D)3%