Zero-Coupon Debt Value Rises When, Ceteris Paribus

question 16

Multiple Choice

Zero-coupon debt value rises when, ceteris paribus

• A) The firm's assets rise in value.
• B) The volatility of the firm's assets declines.
• C) The maturity of the debt declines.
• D) All of the above.

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Definitions:

Return on Equity

A metric indicating financial success determined by dividing a company's net income by its shareholders' equity, demonstrating the efficacy of using investments to create increased profits.

Net Profit Margin

A financial metric that shows the percentage of revenue that remains as profit after all operating expenses, interest, taxes, and preferred stock dividends are deducted.

Dividend Yield

A financial ratio that shows how much a company pays out in dividends each year relative to its share price.

Debt-to-equity Ratio

A financial ratio highlighting the use of debt versus equity in the capital structure supporting a company's assets.