ABC Corporation issued P1,000,000 in 8% bonds, maturing in ten years and paying interest semi-annually. The bonds were issued at face value. What can you assume about the interest rates at the time the bonds were issued? a. The market rate for this bond was about 8%. b. The nominal rate of interest was about 8%. c. The coupon rate on the bond includes no premium for credit risk. d. The risk-free interest rate is about 6%.
ABC Corporation issued P1,000,000 in 8% bonds, maturing in ten years and paying interest semi-annually. The bonds were issued at face value. What can you assume about the interest rates at the time the bonds were issued? a. The market rate for this bond was about 8%. b. The nominal rate of interest was about 8%. c. The coupon rate on the bond includes no premium for credit risk. d. The risk-free interest rate is about 6%.
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 2PA: On July 1, Somerset Inc. issued $200,000 of 10%, 10-year bonds when the market rate was 12%. The...
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ABC Corporation issued P1,000,000 in 8% bonds, maturing in ten years and paying interest semi-annually. The bonds were issued at face value. What can you assume about the interest rates at the time the bonds were issued?
a. The market rate for this bond was about 8%.
b. The nominal rate of interest was about 8%.
c. The coupon rate on the bond includes no premium for credit risk.
d. The risk-free interest rate is about 6%.
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