Vaughn Corporation Is Considering the Issue of Commercial Paper and Would

question 60

Multiple Choice

Vaughn Corporation is considering the issue of commercial paper and would like to know the yield it should offer on its commercial paper. The corporation believes that a 0.2 percent credit riskpremium, a 0.1 percent liquidity premium, and a 0.3 percent tax adjustment are necessary to sell its commercial paper to investors. Furthermore, annualized T-bill rates are 7 percent. Based on this information, Vaughn should offer ____ percent on its commercial paper.

• A) 8
• B) 7.6
• C) 7.5
• D) 7.9
• E) none of the above

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Definitions:

Genes

Units of heredity made up of DNA that act as instructions to make molecules called proteins, influencing individual traits.

Nativists

Scholars who argue that certain skills or abilities are innate and hard-wired into the brain at birth.

Nature

The phenomena of the physical world collectively, including plants, animals, the landscape, and other features and products of the earth, as opposed to humans or human creations.

Heredity

The passing of traits from parents to offspring through genes.