Use the Information for the Question(s)below

question 14

Multiple Choice

Use the information for the question(s) below.
Luther Industries needs to raise $25 million to fund a new office complex.The company plans on issuing ten-year bonds with a face value of $1000 and a coupon rate of 7.0% (annual payments) .The following table summarizes the YTM for similar ten-year corporate bonds of various credit ratings:
-Assuming that Luther's bonds receive a AAA rating,the number of bonds that Luther must issue to raise the needed $25 million is closest to:

• A)24,655.
• B)25,000.
• C)24,477.
• D)26,681.

---

Definitions:

Certainty Effect

The tendency for people to favor options that are certain over those that are probable, even when the probable options may result in a better outcome.

Risk Aversion

Risk Aversion is the tendency to avoid or minimize risks, reflecting a preference for certainty or safer options when making decisions under conditions of uncertainty.

Zeigarnik Effect

A tendency to experience automatic, intrusive thoughts about a goal whose pursuit has been interrupted.

Temporal Discounting

The tendency to value immediate rewards more highly than future rewards, affecting decision-making and impulse control.