Tucker Corporation Is Planning to Issue New 20-Year Bonds

question 42

Multiple Choice

Tucker Corporation is planning to issue new 20-year bonds.The current plan is to make the bonds non-callable,but this may be changed.If the bonds are made callable after 5 years at a 5% call premium,how would this affect their required rate of return?

• A) Because of the call premium,the required rate of return would decline.
• B) There is no reason to expect a change in the required rate of return.
• C) The required rate of return would decline because the bond would then be less risky to a bondholder.
• D) The required rate of return would increase because the bond would then be more risky to a bondholder.
• E) It is impossible to say without more information.

---

Definitions:

Continually Inhabited

Describes a place that has had an unbroken presence of inhabitants or a consistent human settlement over a long period of time.

Great Plaza

A large open space in ancient Mesoamerican cities, often the center of political, religious, and social activities.

Tikal

Tikal is an ancient Mayan city located in modern-day Guatemala, known for its impressive ruins, including towering pyramids and temples, and its significance in Mayan history and culture.

Dwelling Sites

Locations or places where people live; these can range from temporary shelters to permanent homes.