Lloyd Industries Raised $28 Million in Order to Upgrade Its

question 96

Multiple Choice

Lloyd Industries raised $28 million in order to upgrade its roller kiln furnace for the production of ceramic tile.The company funded this by issuing 15-year bonds with a face value of $1000 and a coupon rating of 6.2%,paid annually.The above table shows the yield to maturity for similar 15-year corporate bonds of different ratings issued at the same time.When Lloyd Industries issued their bonds,they received a price of $962.63.Which of the following is most likely to be the rating these bonds received?

• A)AA
• B)A
• C)BBB
• D)BB
• E)AAA

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Definitions:

Mode

The value that appears most frequently in a data set, representing the most common or popular outcome among the observed values.

Sample Variance

A metric indicating the spread or variation in a set of sample data, determined by dividing the sum of the squared differences from the mean by the total number of data points minus one.

Sample Variance

A measurement of the spread between numbers in a data sample, calculated by taking the mean of the squared deviations from the sample mean.

Squared Deviations

The squared differences between each observation and the mean, used in the calculation of variance.