Which of the following statements relating to bond pricing is false? Group of answer choices An...

Which of the following statements relating to bond pricing is false?

Group of answer choices

An indenture is a legal document that spells out the contract between the bondholders and corporation.

Everything else being equal, a bond with 10 years to maturity will sell at a smaller premium or discount than a bond with 5 years to maturity.

A call option on a bond favors the firm rather than the investor.

Everything else being equal, greater differences between the coupon rate and the "required" rate will result in greater premiums or discounts.

Expert Solution

Option (a) statement is true. Indenture is an legal document which includes the terms and conditions of bonds issued and binds both the issuer and purchaser of contract. Indenture includes details of bond and responsibility of both issuer and purchaser of bonds.

Option (c) statement is true. A call option would favor more a firm as firm would call the bonds when it would benefit them rather than investors. Taking into consideration market interest condition firms would prefer to call back the bonds so that there is lower cash outflow.

Option (d) statement is true. With higher difference in coupon rate and required rate the higher would be the premium or discount on bond. With lower difference between the two the lower would be the premium or discount.

Option (b) statement is false. Bond with higher maturity period of 10 years will have higher premium or discount then bonds with maturity of less than 10 years. Increase in maturity period would lead to higher premium or discount then bonds having lower maturity period.

jeff jeffy answered 4 months ago

Which of the following statements is false? Group of answer choices One disadvantage of the corporate...

Which of the following statements is false? Group of answer choices One disadvantage of the corporate form is the double taxation of profit. A debenture is an unsecured debt with maturity longer than 10 years. The primary goal of a publicly-owned for-profit corporation is to maximize the value of stock. As interest rate increases significantly, companies are more likely to call the callable bonds they have issued. Equity holders have a residual claim in the firm while creditors have voting...

1.Which of the following statements is FALSE? Group of answer choices a.If a stock is correctly...

1.Which of the following statements is FALSE? Group of answer choices a.If a stock is correctly priced, the expected holding period return for buying the stock at the current market price equals the expected return of other investments available in the market with equivalent risk. b.If the current stock price were less than the intrinsic value, buying the stock would be a positive NPV investment, and we would expect investors to rush in and buy it, driving up the stock's...

Which of the following is a form of dynamic pricing? Group of answer choices target pricing...

Which of the following is a form of dynamic pricing? Group of answer choices target pricing prestige pricing above-, at-, and below-market pricing cost-plus pricing yield management pricing

All of the following statements are false EXCEPT Group of answer choices the frequency of light...

All of the following statements are false EXCEPT Group of answer choices the frequency of light is directly proportional to the speed of light (in a vacuum). the wavelength of light is directly proportional to its frequency. the wavelength of light is directly proportional to the speed of light (in a vacuum). the frequency of light is inversely proportional to its energy. the energy of a photon of light is inversely proportional to its wavelength.

Which of the following statements is CORRECT? Group of answer choices An increase in the DSO,...

Which of the following statements is CORRECT? Group of answer choices An increase in the DSO, other things held constant, could be expected to increase the ROE. An increase in the DSO, other things held constant, could be expected to increase the total assets turnover ratio. If two firms have the same ROA, the firm with the most debt can be expected to have the lower ROE. The ratio of long-term debt to total capital is less likely to experience...

Which of the following statements is correct? Group of answer choices None of these is correct....

Which of the following statements is correct? Group of answer choices None of these is correct. The demand for iPads is more elastic than the demand for tablets in general. Here, iPads is one kind of tablets. The demand for a necessity good is more elastic than the demand for a luxury good. The demand for cell phones is more elastic over a short period of time than over a long period of time

Which of the following statements is correct? Group of answer choices If a project with normal...

Which of the following statements is correct? Group of answer choices If a project with normal cash flows has an IRR greater than the WACC, the project must also have a positive NPV. A project’s MIRR can never exceed its IRR. If Project A’s IRR exceeds Project B’s, then A must have the higher NPV. If the NPV is negative, the IRR must also be negative. If a project with normal cash flows has an IRR less than the WACC,...

Which of the following statements is CORRECT? Group of answer choices The WACC is not related...

Which of the following statements is CORRECT? Group of answer choices The WACC is not related to the cost of debt or equity capital The WACC will be changing for the changing market value of the shares and debentures The WACC should be the hurdle rate for evaluating all projects The WACC is the expected rate of return for the market

Which of the following statements is(are) correct? Group of answer choices Assume that goods A and...

Which of the following statements is(are) correct? Group of answer choices Assume that goods A and B are substitutes. Suppose a technology improvement in the production of good A and an increase in the price of good B. If everything else remains the same, in the market of good A, the equilibrium price decreases but the effect on the equilibrium quantity depends on the magnitudes of the shifts in supply and demand Assume that goods M and N are complements....

Which of the following statements is true? Group of answer choices If a firm has a...

Which of the following statements is true? Group of answer choices If a firm has a project that management believes will be very successful, management is more likely to finance the project with debt financing than with new equity Issuing new equity is a positive signal to investors Issuing debt is a negative signal to investors If a firm has a project that management believes will be very successful, management is more likely to finance the project with equity than...

Question