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sjbux sjbux
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Posts: 419
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4 years ago
Use the information for the question(s) below.

Luther Industries needs to raise $25 million to fund a new office complex.  The company plans on issuing ten-year bonds with a face value of $1000 and a coupon rate of 7.0% (annual payments).  The following table summarizes the YTM for similar ten-year corporate bonds of various credit ratings:

RatingAAAAAABBBBB
YTM6.70%6.80%7.00%7.40%8.00%


Assuming that Luther's bonds receive a AAA rating, the price of the bonds will be closest to:

▸ $1014

▸ $1021

▸ $937

▸ $1000
Textbook 
Fundamentals of Corporate Finance

Fundamentals of Corporate Finance


Edition: 2nd
Authors:
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anuja709anuja709
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#1
Posts: 375
Rep: 64 0
4 years ago
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sjbux Author
wrote...
#2
4 years ago
Helps a lot... Now I'm ready for my quiz
wrote...
#3
4 years ago
Use the information for the question(s) below.

Luther Industries needs to raise $25 million to fund a new office complex.  The company plans on issuing ten-year bonds with a face value of $1000 and a coupon rate of 7.0% (annual payments).  The following table summarizes the YTM for similar ten-year corporate bonds of various credit ratings:

RatingAAAAAABBBBB
YTM6.70%6.80%7.00%7.40%8.00%


Assuming that Luther's bonds receive a AAA rating, the number of bonds that Luther must issue to raise the needed $25 million is closest to:

▸ 24,477

▸ 26,681

▸ 24,655

▸ 25,000
wrote...
#4
4 years ago
24,477
wrote...
#5
4 years ago
Use the information for the question(s) below.

Luther Industries needs to raise $25 million to fund a new office complex.  The company plans on issuing ten-year bonds with a face value of $1000 and a coupon rate of 7.0% (annual payments).  The following table summarizes the YTM for similar ten-year corporate bonds of various credit ratings:

RatingAAAAAABBBBB
YTM6.70%6.80%7.00%7.40%8.00%


Assuming that Luther's bonds receive a AA rating, the price of the bonds will be closest to:

▸ $1014

▸ $937

▸ $1021

▸ $1000
wrote...
#6
4 years ago
$1014
wrote...
#7
4 years ago
This calls for a celebration Person Raising Both Hands in Celebration
wrote...
#8
4 years ago
Use the information for the question(s) below.

Luther Industries needs to raise $25 million to fund a new office complex.  The company plans on issuing ten-year bonds with a face value of $1000 and a coupon rate of 7.0% (annual payments).  The following table summarizes the YTM for similar ten-year corporate bonds of various credit ratings:

RatingAAAAAABBBBB
YTM6.70%6.80%7.00%7.40%8.00%


Assuming that Luther's bonds receive a AA rating, the number of bonds that Luther must issue to raise the needed $25 million is closest to:

▸ 24,477

▸ 24,655

▸ 25,000

▸ 26,681
wrote...
#9
4 years ago
24,655
wrote...
#10
4 years ago
Use the information for the question(s) below.

Luther Industries needs to raise $25 million to fund a new office complex.  The company plans on issuing ten-year bonds with a face value of $1000 and a coupon rate of 7.0% (annual payments).  The following table summarizes the YTM for similar ten-year corporate bonds of various credit ratings:

RatingAAAAAABBBBB
YTM6.70%6.80%7.00%7.40%8.00%


What rating must Luther receive on these bonds if they want the bonds to be issued at par?

▸ AA

▸ B

▸ A

▸ BBB
wrote...
#11
4 years ago
A
wrote...
#12
4 years ago
I appreciate what you did here, answered it correctly Smiling Face with Open Mouth
wrote...
#13
4 years ago
Use the information for the question(s) below.

Luther Industries needs to raise $25 million to fund a new office complex.  The company plans on issuing ten-year bonds with a face value of $1000 and a coupon rate of 7.0% (annual payments).  The following table summarizes the YTM for similar ten-year corporate bonds of various credit ratings:

RatingAAAAAABBBBB
YTM6.70%6.80%7.00%7.40%8.00%


Suppose that when these bonds were issued, Luther received a price of $972.42 for each bond.  What is the likely rating that Luther's bonds received?

▸ B

▸ BBB

▸ AA

▸ A
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