A Bond Has a Par Value of $1,000, a Current

question 7

Multiple Choice

A bond has a par value of $1,000, a current yield of 6.25 percent, and semiannual interest payments.The bond quote is 100.8.What is the amount of each coupon payment?

• A)$63.00
• B)$31.50
• C)$37.50
• D)$62.50
• E)$31.25

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Definitions:

Liquidation

The process of converting assets into cash or cash equivalents by selling them in the market.

Going Concern

An accounting assumption that a company will continue to operate for the foreseeable future, thus justifying the presence of its assets and liabilities.

Financial Restructuring

The process of reorganizing a company's financial structure, often involving re-negotiation of debts and equity, to improve its liquidity and ensure its survival.

WACC

The weighted average cost of capital, which is the average rate of return a company is expected to pay its security holders to finance its assets.