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Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 10P
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Which is a better measure for risk-free rate, and cost of debt?
10-year T-Bond: YTM of long-term corporate bonds
10-year T-bond: Coupon rates of long-term corporate bonds
6-month T-Bond; YTM of long-term corporate bonds
6-month T-Bond; Coupon rates of short-term bonds
Question 6
All FOUR Bonds have
the same maturity = 10 years,
• the same coupon rate= = 9%
• different bond ratings
Which one has the highest Yield-to-Maturity (YTM)?
Mackinaw: AAA-rated (high grade)
O Kalamazoo: AA rated
Battle Creek: BBB rated
O Jackson: BB (low grade)
Transcribed Image Text:Which is a better measure for risk-free rate, and cost of debt? 10-year T-Bond: YTM of long-term corporate bonds 10-year T-bond: Coupon rates of long-term corporate bonds 6-month T-Bond; YTM of long-term corporate bonds 6-month T-Bond; Coupon rates of short-term bonds Question 6 All FOUR Bonds have the same maturity = 10 years, • the same coupon rate= = 9% • different bond ratings Which one has the highest Yield-to-Maturity (YTM)? Mackinaw: AAA-rated (high grade) O Kalamazoo: AA rated Battle Creek: BBB rated O Jackson: BB (low grade)
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