A Firm Issues $200 Million in Straight Bonds at Par

question 10

Multiple Choice

A firm issues $200 million in straight bonds at par and a coupon rate of 7%.The firm pays fees of 2.5% on the face value of the bonds.What is the net amount of funds that the debt issue will provide for the firm?

• A)$186 million
• B)$205 million
• C)$195 million
• D)$200 million

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Definitions:

Abstract

A brief summary of a research article, thesis, review, or other long report on a subject or project.

Concrete

Existing in a material or physical form; not abstract.

Concept

An abstract idea or a mental symbol that represents some aspect of the world, often forming the basis of thought.

Abstractness

The quality of being abstract; not related to concrete objects but expressing ideas and concepts at a higher level.