The Amount of Cash Received on Issuance of a 9

question 111

Multiple Choice

The amount of cash received on issuance of a 9 percent,$10,000 bond dated February 1 and issued June 1 at 102 1/2 is

• A)$10,300.
• B)$11,100.
• C)$10,200.
• D)$10,550.

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Definitions:

Risk Characteristics

The identifiable attributes of a security, financial instrument, or investment that determine its risk profile, such as volatility, liquidity, and credit risk.

Divisions

Separate parts or branches of a company that operates under the greater corporate umbrella, each might focus on a specific product line or market segment.

Empirical Approach

A method of acquiring knowledge based on observation or experience rather than theory or pure logic.

After-Tax Cost of Capital

The net cost of capital to a firm after accounting for the tax benefits received on debt interest, reflecting the true cost of acquiring funding after taxes.