What is the fair value of a $1,000 bond with an 8% coupon rate and a...

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Finance

What is the fair value of a $1,000 bond with an 8% coupon rateand a required rate of return of 15%?
A. More than $1,000
B. Less than $1,000
C. Equal to $1,000
2. To increase the present value, the discount rate (interestrate) should:
A. Increase
B. Decrease
3. In calculating the costs of sources of fund, the tax rate isimportant to which of the following source of fund?
A. Common shares
B. Retained earnings
C. Bonds
D. Preferred shares
4. Bonds are considered a riskier investment than common stockfor investors.
A. True
B. False
5. Preferred stockholders are owners of the corporation and haverights upon liquidation and to receive dividends
A. True
B. False Q

Answer & Explanation Solved by verified expert

4.0 Ratings (757 Votes)

Part 1 Value of Bond PV of Cash flows from it If Coupon rate discount rate Value of Bond is more than Fair Value and Vice versa Thus in the given case Value of bond is less than 1000 OPtion See Answer

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