All Review Questions are available in MyLab Finance. 7-1. Distinguish between debentures and mortgage bonds. 7-2. Define (a) Eurobonds, (b) zero coupon bonds, and (c) junk bonds. 7-3. Describe the bondholder's claim on the firm's assets and income. 7-4. a. How does a bond's par value differ from its market value? b. Explain the differences among a bond's coupon interest rate, current yield, and required rate of return.
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- The relationship between bond prices and the interest rate bonds pay: Seleccione una: a. is Positive O b. depends on stock prices c. is unrelated d. is inverse or negative1. Go to finance yahoo and search for bonds. Address the following about the bond that you select and bonds in general: a) Describe the different types of bonds.b) Describe the difference between stocks and bonds.c) Select a specific bond to focus on. Describe the bond and why you selected it.d) Explain the security of the bond, that is, whether the bond has collateral.e) Describe how the seniority of the bond is calculated.f) Describe the presence of a sinking fund. Does the bond you selected to fit into this category? Explain. If it does not, find one that does and describe how this impacts the bond.g) Review a bond with a call provision and explain the specified call dates and call prices.h) Review a bond with a deferred call accompanying the above call provision and explain what this means.i) What are positive covenants.? Discuss several possible positive covenants the bond company might consider.j) What are negative covenants? Also, discuss several possible negative covenants the…Identify the variables that are required to calculate the value of a bond. More than one answer may be correct. Multiple select question. The market interest rate The time to maturity of the bond The coupon rate of the bond The bond's S&P rating The original issue price of the bond
- Describe in detail the key features of a bond (face value, maturity, coupon rate, coupon, yield to maturity, current yield). What are the cash flows associated with a bond? What is a discount bond? Premium bond? Par bond? How does the price of a bond vary in relationship to market rates?Give typing answer with explanation and conclusionWhat happens to Bond prices, quantities, and interest rates if (Make sure to include the supply and demand graph for bonds for each question : a) Decrease in wealth b) Increase in risk c) Decrease in liquidity
- Which of the following statements is CORRECT? Group of answer choices The bond-yield-plus-risk-premium approach to estimating the cost of common equity involves adding a risk premium to the interest rate on the company’s own long-term bonds. The size of the risk premium for bonds with different ratings is published daily in The Wall Street Journal or is available online. The WACC is calculated using a before-tax cost for debt that is equal to the interest rate that must be paid on new debt, along with the after-tax costs for common stock and for preferred stock if it is used. An increase in the risk-free rate is likely to reduce the marginal costs of both debt and equity. The relevant WACC can change depending on the amount of funds a firm raises during a given year. Moreover, the WACC at each level of funds raised is a weighted average of the marginal costs of each capital component, with the weights based on the firm’s target capital structure. Beta measures market risk,…Using the previous information, correctly match each curve on the graph to it's corresponding issuing company. (Hint: Each curve indicates the path that each bond's price, or value, is expected to follow.) Curve A Curve B Curve C Based on the preceding information, which of the following statements are true? Check all that apply. O Johnson Incorporated's bonds have the highest expected total return. O The bonds have the same expected total return. O The expected capital gains yield for Smith, LLC's bonds is negative. O The expected capital gains yield for Smith, LLC's bonds is greater than 12%. Irwin Corporation's bonds have exhibited a substantial trading volume in the past few years. Its bonds would be referred to as a1. what are bonds and why would a company use them? 2. how do you value a bond? 3. what are bond yields and what are the determinants of bond yields?
- 2. How does a bond issuer decide on the appropriate coupon rates to set on its bonds? Explain the difference between the coupon rate and the required return?The time value of money is used in calculating bond prices because: Group of answer choices A - The company might choose to repay the bonds prior to their maturity date B - Bond investors receive future payments and purchase bonds with current dollars C - The amount to be repaid at maturity will change as market rates change D - Cash interest payments to bondholders will change as market rates change1. To calculate a gain or loss on redemption of a bond, you compare a. The market interest rate to the contract rate b. The carrying value value of the bond to the proceeds received from the sale of the bond c. The income for the period d. The proceeds to the unamortized premium or discount 2. If the proceeds are greater than the carrying value, you will have a a. gain with a credit balance b. gain with a debit balance c. loss with a debit balance d. loss with a credit balance