Gilligan Co

question 93

Multiple Choice

Gilligan Co.'s bonds currently sell for $1,150.They have a 6.75% annual coupon rate and a 15-year maturity, and are callable in 6 years at $1,067.50.Assume that no costs other than the call premium would be incurred to call and refund the bonds, and also assume that the yield curve is horizontal, with rates expected to remain at current levels on into the future.Under these conditions, what rate of return should an investor expect to earn if he or she purchases these bonds, the YTC or the YTM?

• A) 3.92%
• B) 4.12%
• C) 4.34%
• D) 4.57%
• E) 4.81%

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Price Control

Government-imposed limits on the prices that can be charged for goods and services in a market, usually to curb inflation or protect consumers.

Price Ceiling

A legal maximum price that can be charged for a good or service.

Price Floor

A minimum price set by the government, below which the sale of a product is not allowed.

Price Ceiling

A government-imposed limit on how high a price can be charged for a product, aimed at protecting consumers from high prices.