Wyatt Corporate issued a 20 year, 8.25% semi-annual coupon bond. This bond has a face value of… 1 answer below »

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Which of the following is the best definition of a corporate bond?

(a) represents ownership, where a company promises to pay a certain coupon interest

payment every period and $1,000 at maturity.

(b) represents ownership and provides the holder the right to vote and a claim on

residual cash flows and assets.

(c) an amortized loan that specifies a set payment that is the same for every year.

(d) a contractual obligation that provides the holder the right to vote and a claim on

residual cash flows and assets.

(e) a contractual obligation, where a company promises to pay a certain coupon interest

payment every period and $1,000 at maturity.

2. If general interest rates decrease dramatically, which statement is most correct?

(a) Long-term bonds will increase in value more than short-term bonds.

(b) Short-term bonds will decrease in value more than long-term bonds.

(c) Long-term bonds will decrease in value more than short-term bonds.

(d) Short-term bonds will increase in value more than long-term bonds.

(e) Long-term and short-term bonds will change in value by the same amount.

3. Wyatt Corporate issued a 20 year, 8.25% semi-annual coupon bond. This bond has a face

value of $1,000 and currently sells in the market at the price of $928.69. Its YTM is 9.00%

What coupon payment does this bond pay every 6 months?

(a) $39.469

(b) $45.000

(c) $20.625

(d) $41.250

(e) $41.791

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