A Firm Issues $200 Million in Ten-Year Bonds with an Annual

question 83

Multiple Choice

A firm issues $200 million in ten-year bonds with an annual coupon rate of 6%.The firm makes a final payment of $68 million on the tenth and final coupon date.If the firm uses a sinking fund to repurchase some of the bond issue on each coupon payment date,what percentage of the issue must they repurchase each year?

• A)10%
• B)7.2%
• C)7.33%
• D)6%
• E)8%

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Definitions:

Maturation

The process of development in which an individual reaches a higher level of complexity and functionality, often through natural growth or learning.

Apprenticeship

A system of training a new generation of practitioners of a trade or profession with on-the-job training and often some accompanying study.

Piaget

Pertains to Jean Piaget, a Swiss psychologist renowned for his groundbreaking contributions to the study of child development and cognitive theory.

Formal Operational

A stage in Jean Piaget's theory of cognitive development where individuals (typically 12 years and older) gain the ability to think abstractly, reason logically, and use deductive reasoning.