Camellia corporation issued abond four years

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Reference no: EM132069027

1. Camellia Corporation issued a 5% bond four years ago at par value. The market interest rate on comparable bonds today is 4%.

A) This bond sells at a premium and the coupon rate is lower than the yield.

B) This bond sells at a discount and the coupon rate is higher than the yield.

C) This bond sells at a premium and the coupon rate is higher than the yield.

D) This bond sells at a discount and the coupon rate is lower than the yield.

2. A bond quoted at a price of 95% of its par value

A) has a market yield that exceeds the coupon.

B) is a premium bond.

C) yields 9.5%.

D) yields 5%.

3. Consider the following project:

Y0 Y1 Y2 Y3 Y4 Y5 Y6 Y7

CF $0 –$100 $50 $80 $30 $30 $30 –$60

a) What is the IRR?

b) What is the payback time?

Reference no: EM132069027

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