Unit 7: Risks Returns and the Cost of Capital – Lab: WileyPLUS Assignments

    Multiple Choice Question 38
    Briar Corp is issuing a 10-year bond with a coupon rate of 7 percent. The interest rate for similar bonds is currently 9 percent. Assuming annual payments what is the present value of the bond? (Do not round intermediate computations. Round your final answer to the nearest dollar.)
    $990
    $945
    $1066
    $872
    Multiple Choice Question 43
    Giant Electronics is issuing 20-year bonds that will pay coupons semiannually. The coupon rate on this bond is 7.8 percent. If the market rate for such bonds is 7 percent what will the bonds sell for today? (Do not round intermediate computations. Round your final answer to the nearest dollar.)
    $1085
    $923
    $861
    $1037
    Nathan Akpan is planning to invest in a seven-year bond that pays annual coupons at a rate of 7 percent. It is currently selling at $927.23. What is the current market yield on such bonds? (Round to the closest answer.)
    7.5%
    10.4%
    8.4%
    9.5%
    Multiple Choice Question 67
    Which of the following statements is true?
    The real rate of interest varies with the business cycle with the lowest rates seen at the end of a period of business expansion and the highest at the bottom of a recession.
    The interest rate risk premium always adds a downward bias to the slope of the yield curve.
    The longer the maturity of a security the greater its interest rate risk.
    If investors believe inflation will be subsiding in the future the prevailing yield will be upward sloping.
    Multiple Choice Question 71
    Which of the following statements is true?
    The lower the transaction costs are the greater a security’s marketability.
    The interest rate or yield on a security varies with its degree of marketability.
    U.S. Treasury bills have the largest and most active secondary market and are considered to be the most marketable of all securities.
    All of the above are true.
    Multiple Choice Question 72
    Which of the following statements isNOTtrue?
    The risk that the lender may not receive payments as promised is called default risk.
    Investors must pay a premium to purchase a security that exposes them to default risk.
    U.S. Treasury securities are the best proxy measure for the risk-free rate.

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