« previous next »

Author Question: If the demand for a new bond issue increases, it is likely that the coupon rate will be adjusted ... (Read 48 times)

cool

  • Hero Member
  • *****
  • Posts: 570
on: Jul 10, 2018
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.
Foundations of Finance ¦ Keown, Petty, Martin ¦ 9th Edition
Buy Test-Bank


poopface

  • Sr. Member
  • ****
  • Posts: 339
Reply #1 on: Jul 10, 2018
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
« previous next »
 

Did you know?

Drug-induced pharmacodynamic effects manifested in older adults include drug-induced renal toxicity, which can be a major factor when these adults are experiencing other kidney problems.

Did you know?

According to the Migraine Research Foundation, migraines are the third most prevalent illness in the world. Women are most affected (18%), followed by children of both sexes (10%), and men (6%).

Did you know?

As many as 28% of hospitalized patients requiring mechanical ventilators to help them breathe (for more than 48 hours) will develop ventilator-associated pneumonia. Current therapy involves intravenous antibiotics, but new antibiotics that can be inhaled (and more directly treat the infection) are being developed.

Did you know?

To prove that stomach ulcers were caused by bacteria and not by stress, a researcher consumed an entire laboratory beaker full of bacterial culture. After this, he did indeed develop stomach ulcers, and won the Nobel Prize for his discovery.

Did you know?

About one in five American adults and teenagers have had a genital herpes infection—and most of them don't know it. People with genital herpes have at least twice the risk of becoming infected with HIV if exposed to it than those people who do not have genital herpes.

Myocardial Oxygen supply and demand Myocardial Oxygen supply and demand
W. A. Rogers’s engraving, “Out of the Game,” showed one injured boy tending to another. It appeared W. A. Rogers’s engraving, “Out of the Game,” showed one injured boy tending to another. It appeared
A demand delivery system uses a fuel-pressure regulator attached to the fuel pump assembly inside ... A demand delivery system uses a fuel-pressure regulator attached to the fuel pump assembly inside ...
The original Supply and Demand graph The original Supply and Demand graph
Calculating Growth Rate of Bacteria Calculating Growth Rate of Bacteria
Nick buys a $25 000, 5.4% bond with quarterly interest coupons, 3 years before maturity, to ... Nick buys a $25 000, 5.4% bond with quarterly interest coupons, 3 years before maturity, to ...
Video: Methods that regulate pH

For a complete list of videos, visit our video library