2. ABC Corporation issued P1,000,000 in 8% bonds, maturing in ten years and paying interest semi-annually. The bonds were issued at face value. What can you assume about the interest rates at the time the bonds were issued? a. The market rate for this bond was about 8%. b. The nominal rate of interest was about 8%. c. The coupon rate on the bond includes no premium for credit risk. d. The risk-free interest rate is about 6%.
2. ABC Corporation issued P1,000,000 in 8% bonds, maturing in ten years and paying interest semi-annually. The bonds were issued at face value. What can you assume about the interest rates at the time the bonds were issued? a. The market rate for this bond was about 8%. b. The nominal rate of interest was about 8%. c. The coupon rate on the bond includes no premium for credit risk. d. The risk-free interest rate is about 6%.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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2. ABC Corporation issued P1,000,000 in 8% bonds, maturing in ten years and paying interest semi-annually. The bonds were issued at face value. What can you assume about the interest rates at the time the bonds were issued?
a. The market rate for this bond was about 8%.
b. The nominal rate of interest was about 8%.
c. The coupon rate on the bond includes no premium for credit risk.
d. The risk-free interest rate is about 6%.
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