Consolidated Insurance Wants to Raise $35 Million in Order to

question 14

Multiple Choice

$\begin{array}{llllll}\text { Security: } & \text { AAA Corporate } & \text { AA Corporate } & \text { A Corporate } & \text { BBB Corporate } & \text { BB } \text { Corporate } \\\hline\text { Yield (\%) : }&6.2&6.4&6.7&7.0&7.5\end{array}$ Consolidated Insurance wants to raise $35 million in order to build a new headquarters. The company will fund this by issuing 10-year bonds with a face value of $1000 and a coupon rating of 6.5%, paid semiannually. The above table shows the yield to maturity for similar 10-year corporate bonds of different ratings. Which of the following is closest to how many more bonds Consolidated Insurance would have to sell to raise this money if their bonds received an A rating rather than an AA rating?

• A) 1156
• B) 750
• C) 765
• D) 686

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Definitions:

Conversion Costs

The combined costs of direct labor and manufacturing overhead, representing the expenditures to convert raw materials into finished goods.

Conversion Costs

The combined costs of direct labor and manufacturing overhead, representing the expenses to convert raw materials into finished goods.

Cost Per Equivalent Unit

A calculation used in process costing, dividing the total cost by the number of units produced to determine the cost per unit.

Conversion Costs

Costs required to convert raw materials into finished products, usually including direct labor and manufacturing overhead.