Cofo Finance Final 2022

Mrs. Rouch's class

The claim of subordinate debenture holders are less likely to be honored

True

Debentures are expected to have a lower yield than secured bonds because the debentures are more risky and therefore less desirable.

False

Which of the following statements is true regarding convertible bonds?

C. These bonds are convertible into common stock of the issuing firm as a pre-specified price

If the corporation were to choose between a debenture, a mortgage bond, or a subordinated debenture which would have the highest yield?

C. Subordinated debenture

Which of the following is true of zero coupon bond?

A. The bond makes no coupon payment

Put the following in order on their claim on assets, who is the last to have a claim on the debt?

B. Common stock, preferred stock, subordinated, unsubordinated

Other things being equal, investors will value in which of the following bonds the highest?

Convertible bonds

Which of the following bond provisions will make a bond more desirable to investors?

The bond is convertible, it is more desirable to investors

The company with a AAA bond rating will command a higher interest rate on its bonds than a company with a lesser triple B rating?

False

If the demand for a new bond issue increases it is likely that the coupon rate will be adjusted upward by the issuing company

False

A firm's bond rating will be favorably affected if they have a low use financial leverage

True

Junk bonds are also called high yield bonds

True

A bond with a par value of 1000, will be listed in the Wall Street journal at a price of 100.50. The bond is selling for 1005

True

A company with a bond rating of triple B is more likely to which of the following qualities compared to a company with a bond rating of B

Little use of subordinated debt

In an efficient market the market value and the intrinsic value of a security should be equal

True

If a bond has a market value that is higher than its par value, then the required return on the bond must be less than the bond's coupon rate.

True

In an efficient securities market, the market value of a security is equal to liquidation value, book value, intrinsic value, or par value?

Intrinsic

Which type of value is shown on a firm's balance sheet?

Book

Which of the following affects an asset's value to an investor?

All of the above, 1,2,3,4

In excel the variable PV stands for par value

False

The interest on corporate bonds is usually paid

Semiannually

What is the value of a bond that matures in 5 years, with an annual coupon payment of 110 and a par value of 2000 annual ROR 8.69

1749.83

How much did the bond sell for today? Sold an issue of 12 year $1000 par bonds to new ships. The bonds paid 4.85% semiannually and the ROR is 9.7.

$660.45

What is the value of the bond that has a par value of 1000, a coupon of $120 annually and matures in 10 years. ROR 7.02

$1349.45

The less risky the bond the lower it will be yield to maturity

True

What is the value of a bond that matures in 17 years makes an annually coupon payment of $50 and has a par value of a 1000. ROR 5.9

$905.02