Question
Tomorrow your firm will issue 30K one-year zero-coupon bonds outstanding priced at $800 per bond. The bonds have a promised cash flow, i.e. face value
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Tomorrow your firm will issue 30K one-year zero-coupon bonds outstanding priced at $800 per bond. The bonds have a promised cash flow, i.e. face value ,of $900. If the firm does not default, it can fully repay the bonds. If the firm defaults, the value of assets will equal $25M and the firm will pay $3M in bankruptcy costs.
What is the promised rate of return on these bonds?
0.13
0.11
0.25
Tomorrow your firm will issue 30K one-year zero-coupon bonds outstanding priced at $800 per bond. The bonds have a promised cash flow, i.e. face value ,of $900. If the firm does not default, it can fully repay the bonds. If the firm defaults, the value of assets will equal $25M and the firm will pay $3M in bankruptcy costs.
What is the promised rate of return on these bonds?
| 0.13 | ||
| 0.11 | ||
| 0.25 |
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Holt McDougal Larson Geometry
Authors: Ron Larson, Laurie Boswell, Timothy D. Kanold, Lee Stiff
1st Edition
0547315171, 978-0547315171
