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Which bond has the greatest interest-rate risk?
A) A 15-yr bond with a 4% coupon (no principal payments priot to maturity)
B) A 15-yr bond a 5% coupon (no principal payments prior to maturity)
C) a 15 yr bond with 0% coupon ( and no pricipal payments prior to maturity)
D) a 15 yr bond with a 15% coupon (principal amortizing in equal installments each year)
E) a 10 yr bond with an 11% coupon (and principal amortising in equal installments each year)
F) the bonds in B and E tie for the highest interest rate risk
G) the bonds in A,B,C and D tie for the highest interest rate risk
H) all bonds have the same interest rate risk
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We want to become millionaires. Our 10th birthday is today, and our grandparents give us $15,000, which we invest at 5% interest rate. We shall pay for a 4 year bachelor’s from our pocket in 8 years at $30,000 per annum. In year 16, we take a vacatio..
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If you require a 9 percent return on bonds such as these with 5 years remaining until maturity and 8.2 percent on bonds such as these with 12 years remaining until maturity, how much would you pay for one of these bonds?
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Hastings Corporation is interested in acquiring Vandell Corporation. Vandell currently has a cost of equity of 10%; 25% of its financing is in the form of 6% debt, and the rest is in common equity. Its federal-plus-state tax rate is 40%. After the ac..
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