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Author Question: Tucker Corporation is planning to issue new 30-year bonds. Initially, the plan was to make the bonds ... (Read 40 times)

Hunchojack2019!!

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on: Aug 7, 2023
Tucker Corporation is planning to issue new 30-year bonds. Initially, the plan was to make the bonds noncallable. If the bonds were made callable after 10 years at an 8% call premium, how would this affect their required rate of return?

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The required rate of return would increase because the bond would then be riskier to a bondholder.


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The required rate of return would decrease because the bond would then belessriskyto a bondholder.


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The required rate of return would remain the same because the corporation’s default risk remains the same.


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The required rate of return would decrease because the call premium would fall each year after the bond iscalled.

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Marked as best answer by Hunchojack2019!! on Aug 7, 2023

LynellDool

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    • i thought about discounts
Reply #1 on: Aug 7, 2023
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Hunchojack2019!!

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Reply 2 on: Aug 7, 2023
Great answer, keep it coming :)

nguyenhoanhat

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Reply 3 on: Yesterday
:D TYSM

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