Business, 23.06.2020 19:01 zahraalshagawa02

Lourdes Corporation's 12% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 30 years, are callable 6 years from today at $1,075. They sell at a price of $1,314.16, and the yield curve is flat. Assume that interest rates are expected to remain at their current level. What is the best estimate of these bonds' remaining life? Round your answer to two decimal places. If Lourdes plans to raise additional capital and wants to use debt financing, what coupon rate would it have to set in order to issue new bonds at par?
1. Since interest rates have risen since the bond was first issued, the coupon rate should be set at a rate above the current coupon rate.
2. Since the bonds are selling at a premium, the coupon rate should be set at the going rate, which is the YTC.
3. Since the bonds are selling at a premium, the coupon rate should be set at the going rate, which is the YTM.
4. Since Lourdes wishes to issue new bonds at par value, the coupon rate set should be the same as that on the existing bonds. Since Lourdes wishes to issue new bonds at par value, the coupon rate set should be the same as the current yield on the existing bonds.

Answers: 3

Show answers

Another question on Business

Business, 22.06.2019 07:20

Richardson hired j.c. flood company, a plumbing contractor, to correct a stoppage in the sewer line of her house. the plumbing company's 'snake' device, used to clear the line leading to the main sewer, became caught in the underground line. to release it, the company excavated a portion of the sewer line in richardson's backyard. in the process, the company discovered numerous leaks in a rusty, defective water pipe that ran parallel with the sewer line. to meet public regulations, the water pipe, of a type no longer approved for such service, had to be replaced either then or later, when the yard would have to be excavated again. the plumbing company proceeded to repair the water pipe. though richardson inspected the company's work daily and did not express any objection to the extra work involved in replacing the water pipe, she refused to pay any part of the total bill after the company completed the entire operation. j.c. flood company then sued richardson for the costs of labor and material it had furnished. (c) for what, if anything, should richardson be liable? explain."

Answers: 1

Answer

Business, 22.06.2019 17:00

You hold a diversified $100,000 portfolio consisting of 20 stocks with $5,000 invested in each. the portfolio's beta is 1.12. you plan to sell a stock with b = 0.90 and use the proceeds to buy a new stock with b = 1.50. what will the portfolio's new beta be? do not round your intermediate calculations.

Answers: 2

Answer

Business, 22.06.2019 17:00

Oliver is the vice president of production at his company and has been managing the launch of new software systems. he worked with a team of individuals who were tasked to create awareness about a specific product and also to approach potential purchasers of the product. which department managers were part of oliver’s team?

Answers: 3

Answer

Business, 22.06.2019 21:00

Describe what fixed costs and marginal costs mean to a company.

Answers: 1

Answer

You know the right answer?

Lourdes Corporation's 12% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 3...

Questions