Author Question: If the demand for a new bond issue increases, it is likely that the coupon rate will be adjusted ... (Read 18 times)

cool

  • Hero Member
  • *****
  • Posts: 570
If the demand for a new bond issue increases, it is likely that the coupon rate will be adjusted
  upward by the issuing company.
 
  Indicate whether the statement is true or false

Question 2

You have just won the university lottery. If you graduate, you will receive a refund equal to the amount of tuition you paid in your first four years of school.
 
  However, you need money now and a firm that specializes in buying expected future cash flows has offered to discount the lottery winnings at a rate of 8 and pay you cash today in exchange for your future lottery winnings. Since you have studied finance, you insist that they discount the cash flows at 12 instead of 8 because there is some risk as to the certainty of your graduating. If the firm agrees to your demand, then this means they will increase the present value of what they will pay you today.
  Indicate whether the statement is true or false.


poopface

  • Sr. Member
  • ****
  • Posts: 339
Answer to Question 1

FALSE

Answer to Question 2

Answer: FALSE
Explanation: An increase in the discount rate will decrease the present value of what the firm will pay you today.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

A cataract is a clouding of the eyes' natural lens. As we age, some clouding of the lens may occur. The first sign of a cataract is usually blurry vision. Although glasses and other visual aids may at first help a person with cataracts, surgery may become inevitable. Cataract surgery is very successful in restoring vision, and it is the most frequently performed surgery in the United States.

Did you know?

For pediatric patients, intravenous fluids are the most commonly cited products involved in medication errors that are reported to the USP.

Did you know?

The types of cancer that alpha interferons are used to treat include hairy cell leukemia, melanoma, follicular non-Hodgkin's lymphoma, and AIDS-related Kaposi's sarcoma.

Did you know?

The average adult has about 21 square feet of skin.

Did you know?

Cocaine was isolated in 1860 and first used as a local anesthetic in 1884. Its first clinical use was by Sigmund Freud to wean a patient from morphine addiction. The fictional character Sherlock Holmes was supposed to be addicted to cocaine by injection.

For a complete list of videos, visit our video library