Use the Information for the Question(s)below

question 98

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 10-year bonds with a face value of $1 000 and a coupon rate of 7.0% (annual payments) . The following table summarises the YTM for similar 10-year corporate bonds of various credit ratings:

-Assuming that Luther's bonds receive a AAA rating, the price of the bonds will be closest to:

• A)$1 021
• B)$1 050
• C)$1 011
• D)$1 000

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Definitions:

Conceptual Skills

The ability to think in abstract terms and to see how parts fit together to form the whole.