A Firm Issues $500 Million in Straight Bonds at Par

question 59

Multiple Choice

A firm issues $500 million in straight bonds at par and a coupon rate of 5%. The firm pays fees of 2% on the face value of the bonds. What is the net amount of funds that the debt issue will provide for the firm?

• A) $466 million
• B) $490 million
• C) $539 million
• D) $514.5 million

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Definitions:

Social Psychological

Pertaining to the scientific study of how individuals think, feel, and behave in social contexts.

Social Categorization

The process of classifying people into groups based on shared characteristics such as nationality, race, or gender.

Out-Group Homogeneity Bias

The perception that members of an out-group are more similar to each other than they actually are or compared to the members of the in-group.

Hypothetical Elderly

A constructed scenario or population involving older adults used to explore theoretical outcomes or behaviors.