A Mining Company Needs to Raise $100 Million in Order

question 60

Multiple Choice

$\begin{array}{llllll}\text { Security: } & \text { AAA Corporate } & \text { AA Corporate } & \text { A Corporate } & \text { BBB Corporate } & \text { BB } \text { Corporate } \\\hline\text { Yield (\%) : }&5.6&5.7&5.9&6.4&7.0\end{array}$ A mining company needs to raise $100 million in order to begin open pit mining of a coal seam. The company will fund this by issuing 30-year bonds with a face value of $1000 and a coupon rating of 6%, paid annually. The above table shows the yield to maturity for similar 30-year corporate bonds of different ratings. If the mining company's bonds receive a A rating, what will be their selling price?

• A) $1013.91
• B) $1016.41
• C) $947.22
• D) $967.64

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