CMS Corporation's Balance Sheet as of Today Is as Follows

question 3

Multiple Choice

CMS Corporation's balance sheet as of today is as follows:

The bonds have a 4.0% coupon rate, payable semiannually, and a par value of $1, 000.They mature exactly 10 years from today.The yield to maturity is 12%, so the bonds now sell below par.What is the current market value of the firm's debt?

• A) $5, 276, 731
• B) $5, 412, 032
• C) $5, 547, 332
• D) $7, 706, 000
• E) $7, 898, 650

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Definitions:

Rice and Beans

A staple food dish in many cultures around the world, consisting of rice and beans as the main ingredients.

Complements

Goods or services that are typically consumed together, where the increase in the price of one leads to a decrease in demand for the other.

Linear Demand Curve

A graphical representation of demand where a straight line shows a constant relationship between quantity demanded and price.

Unit-Elastic

A situation in which a product's price elasticity of demand is exactly one, indicating that the change in quantity demanded is directly proportional to the change in price.