Are Considering 2 Bonds That Will Be Issued Tomorrow Both

question 3

True/False

are considering 2 bonds that will be issued tomorrow Both are rated triple B (BBB, the lowest investment-grade rating), both mature in 20 years, both have a 10% coupon, neither can be called except for sinking fund purposes, and both are offered to you at their $1,000 par values However, Bond SF has a sinking fund while Bond NSF does not Under the sinking fund, the company must call and pay off 5% of the bonds at par each year The yield curve at the time is upward sloping The bond's prices, being equal, are probably not in equilibrium, as Bond SF, which has the sinking fund, would generally be expected to have a higher yield than Bond NSF.

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Definitions:

Roman Catholic Natural Law Ethics

An ethical theory based on the belief that the moral law is discoverable by every person through the use of reason and is grounded in human nature and purpose, as taught within Roman Catholic theology.

Utilitarianism

A moral theory that emphasizes the best action is the one that maximizes utility, generally defined as that which produces the greatest well-being of the greatest number of people.

Kantian Ethics

A deontological ethical theory developed by Immanuel Kant, focusing on the principle that actions are morally right if they are done out of duty and adhere to a universal moral law.

Rawls's Ethics

A theory of justice proposed by philosopher John Rawls, focusing on fairness, equality, and moral decision-making under a veil of ignorance.