An MNC Issues Ten-Year Bonds Denominated in 500,000 Philippines Pesos

question 19

Multiple Choice

An MNC issues ten-year bonds denominated in 500,000 Philippines pesos (PHP) at par. The bonds have a coupon rate of 15 percent. If the peso remains stable at its current level of $.025 over the lifetime of the bonds and if the MNC holds the bonds until maturity, the financing cost to the MNC will be:

• A) 10.0 percent.
• B) 12.5 percent.
• C) 15.0 percent.
• D) None of these are correct.

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Definitions:

Manufacturing Wage Rates

The amount of remuneration or earnings per unit of time by workers in the manufacturing sector.

College Graduate

An individual who has successfully completed a degree program at a college or university.

High School Graduate

An individual who has successfully completed the course of study at a high school, receiving a diploma or certification.

Minimum Wage Rate

The lowest legal wage that can be paid to most workers, set by law to protect workers from exploitation.