Microsoft has issued two different bonds.Bond A is rated AA by Standard & Poors, while Bond B
Question:
Microsoft has issued two different bonds. Bond A is rated AA by Standard & Poors, while Bond B is rated BBB. All else equal, what is true about these two bonds?
Both bonds have the same yield
Bond A has a higher yield than bond B
Bond B has a higher yield than Bond A
Bond B would have zero yield because it is junk bond
Walmart has issued a 10-year bond with a semi-annual coupon of 2%. What would happen to the price of this bond if interest rates in the market increased (assuming no other changes)?
Price would not change
Price would go up
Price would go down
Price would go up, but price of Walmart stock would go down
Jane is a bond-investor. She pays federal income tax in the 35% tax bracket. She is considering purchasing a municipal bond with a yield of 2%. and a corporate bond with a yield of 3%. What is the better investment for Jane? (Assume that the bonds have the same credit rating).
1.) Both investments will give Jane the same after-tax return
2.) The corporate bond will give a higher after-tax return
3.) The municipal bond will give a higher after-tax return
4.) There is not enough information to determine which bond will give the higher after-tax return
Government and Not for Profit Accounting Concepts and Practices
ISBN: 978-1118155974
6th edition
Authors: Michael H. Granof, Saleha B. Khumawala