A Mining Company Needs to Raise $100 Million in Order

question 35

Multiple Choice

A mining company needs to raise $100 million in order to begin open-pit mining of a coal seam. The company will fund this by issuing 30-year bonds with a face value of $1,000 and a coupon rate of 6.5%, paid annually. The above table shows the yield to maturity for similar 30-year corporate bonds of different ratings. If the company's bonds are rated A, what will be their selling price?

• A)$1265.37
• B)$1476.27
• C)$1054.48
• D)$843.58

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Definitions:

Attachment

The emotional bond that forms between individuals, such as between parents and children, providing a sense of security and safety.

Reciprocal

A mutual or two-way exchange or interaction between parties.

Emotional Tie

A deep emotional connection or bond between individuals, often based on love, friendship, or shared experiences.

Basic Trust

A concept in Erik Erikson’s theory of development, referring to the first stage where an infant learns whether or not they can trust that their needs will be met by caretakers.