ABC Company sold $10,000,000 of 30 year, 4% bands at a price to yield 2.5%. The bonds pay interest semiannually Which of the following is a correct Excel input to determine this bonds a.=PV0.025/2,60,-10000000*0.02,-10000000) b.=PV(2.5/2,30/2-10000000*0.02,-10000000) c=PV(0.025,60,-400000,-10000000) d.=PV0.025,30,-10000000*0.04,-10000000)
- ABC Company sold $10,000,000 of 30 year, 4% bands at a price to yield 2.5%. The bonds pay interest semiannually Which of the following is a correct Excel input to determine this bonds
a.=PV0.025/2,60,-10000000*0.02,-10000000)
b.=PV(2.5/2,30/2-10000000*0.02,-10000000)
c=PV(0.025,60,-400000,-10000000)
d.=PV0.025,30,-10000000*0.04,-10000000)
- The amount of periodic interest expense for a particular bond issue is a function of:
a. The coupon rale.
b. The effective rate.
c Both the coupon rate and the effective rate.
d. Neither the coupon rate nor the effective rate.
- The issue price on bonds sold at par value is:
a. Less than the face value.
b. Equal to the face value.
c. Greater than the face value
d. Not determinable.
- Which of the following statements about convertible bonds is true?
a. Conversion of bonds into stock is at the issuing firm's option.
b. Convertible bonds are also known as callable bonds.
c. The bonds will be converted only if the value of the stock is greater than the value of the bonds.
d. All of the above.
- The interest rate on a convertible debt is usually ______ the interest rate on a nonconvertible debt.
a. Higher than.
b. Lower than.
c. Equal to.
d. Not determinable.
- If the stated rate of interest is greater than the market rate of interest, bonds will sell at a discount.
- True
- False
- What happens to the carrying
value of bonds issued at a premium over the life of the bond issue?
a. It increases
b. It decreases
c. It stays the same
d. Not determinable without additional information.
- ABC Company wants to raise $500,000 by issuing a five-year, noninterest-bearing note when the market rate of interest is 8% compounded quarterly. What is the correct Excel input to requisite lace value of the note?
a. =PV(2%,20,,500000)
b. =FV(2%,20,500000)
c. =PV(2%,20,500000)
d. =FV(2%,20,,500000)
- All other things being equal, the interest on secured debt is higher than that on unsecured debt.
a. True
b. False
- From an accounting perspective, one of the advantages of a noninterest-bearing note is that there is no interest expense that must be reported on the income statement:
a.True
b. False
11. Which of the following are alternative names for the coupon rate (of interest)? (Sellect all that apply.)
a. Nominal rate.
b. Staled tale.
e Contract rate
d. Face rate.
e. Yield.
f. Market rate
- The amount of periodic interest paid on a bond issue is determined by
a. The coupon rate
b. The market rate
c Both the coupon rate and the market rate.
d. Neither the coupon rate nor the market rate
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