Malko Enterprises' Bonds Currently Sell for $1,050

question 46

Multiple Choice

Malko Enterprises' bonds currently sell for $1,050.They have a 6-year maturity,an annual coupon of $75,and a par value of $1,000.What is their current yield?

• A)7.14%
• B)7.50%
• C)7.88%
• D)8.27%
• E)8.68%

---

Definitions:

Capital Structure

The mix of different forms of capital, such as debt, equity, and hybrid securities, used by a company to fund its operations and growth.

M&M Proposition I

A theory stating that the value of a leveraged firm is the same as the value of an unleveraged firm provided there are no taxes, bankruptcy costs, and asymmetric information.

Debt-Ratio

is a financial metric that compares a company's total debt to its total assets, showing how much of the company's assets are financed by debt.