A Firm Issues Two-Year Bonds with a Coupon Rate of 6.7

question 90

Multiple Choice

A firm issues two-year bonds with a coupon rate of 6.7%, paid semiannually. The credit spread for this firm's two-year debt is 0.8%. New two-year Treasury notes are being issued at par with a coupon rate of 3.1%. What should the price of the firm's outstanding two-year bonds be per $100 of face value?

• A) $126.40
• B) $147.47
• C) $84.27
• D) $105.34

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Definitions:

Inguinal

Relating to the groin, the area where the thigh meets the abdomen.

Proximal

Situated near the center of the body or the point of attachment.

Proxim

Refers to being closer to the point of reference or origin, typically used in anatomical and spatial contexts.

Cranial Cavity

The space within the skull that houses the brain, part of the dorsal body cavity.