Question: Help Please!! Making flashcards: The Outlet needs to raise $3.2 million for an expansion project. The firm wants to raise this money by selling zero

Help Please!! Making flashcards:

The Outlet needs to raise $3.2 million for an expansion project. The firm wants to raise this money by selling zero coupon bonds with a par value of $1,000 that mature in 20 years. The market yield on similar bonds is 7.8 percent. How many bonds must The Outlet sell to raise the money it needs? (Assume semi-annual compounding.) Select one: a. 3,200 bond b. 11,508 bond c. 3,450 bond d. 13,797 bond e. 14,783 bonds

The term structure of interest rates represents the relationship between which of the following? Select one: a. Real rates on risk-free and risky bonds b. Nominal rates on risk-free and risky bonds c. Nominal and real rates on default-free, pure discount bonds d. Market and coupon rates on default-free, pure discount bonds e. Nominal rates on default-free, pure discount bonds and time to maturity

When a bond's yield to maturity is less than the bond's coupon rate, the bond: Select one: a. is selling at a premium. b. had to be recently issued. c. has reached its maturity date. d. is priced at par. e. is selling at a discount.

Which one of the following statements is true? Select one: a. The current yield on a premium bond is equal to the bond's coupon rate. b. The current yield on a par value bond will exceed the bond's yield-to-maturity. c. A discount bond has a coupon rate that is less than the bond's yield to maturity. d. A premium bond has a current yield that exceeds the bond's coupon rate. e. The yield to maturity on a premium bond exceeds the bond's coupon rate.

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