What is the yield-to-maturity on bond

Assignment Help Financial Management

Reference no: EM132050713

1. Two mutually exclusive projects, Project S and Project L, each have a cost of $10,000. Their NPV profiles cross at a discount rate of 15 percent. Which of the following statements best describes this situation?

a. The NPV and IRR methods will not select the same project if the cost of capital is less than 15 percent; for example, 10 percent.

b. To determine if a ranking conflict will occur between the two projects the cost of capital is needed as well as an additional piece of information.

c. The NPV and IRR methods will always select the same project.

d. Project S should be selected at any cost of capital, because it has a higher IRR.

e. Project L should be selected at any cost of capital, because it has a higher IRR.

2. A bond has six years to maturity and has a coupon rate of 7.5 percent. Coupon payments are made annually and the bond has a face value of $1,000. The bond is currently selling in the market for $1,127. What is the yield-to-maturity on this bond?

A. 7.5 percent

B. 5 percent

C. 11.5 percent

D. 2.5 percent

E. None of the options is correct

Reference no: EM132050713

Questions Cloud

What is average annualized compounded return of stock : What is the average annualized compounded return of a stock given the information below:

When would it be suitable to use the delphi method : Research and discuss Critical Thinking Skills. In your discussion provide a full overview including application of critical thinking.

Who is directly impacted by the health policy issue : Summarize the problem statement using relevant background information and supporting details from the articles you located.

How do administrative issues differ : Contrast the operations of socially oriented adult day services (ADS) with those of medically oriented ADS. How do administrative issues differ?

What is the yield-to-maturity on bond : Two mutually exclusive projects, Project S and Project L, each have a cost of $10,000. What is the yield-to-maturity on this bond?

Research a large global transportation company : Research a large global transportation company, write a paper that discusses how customer service supports logistics and supply chain management.

Should a dnp be the entry-level education for np practice : Educational entry level for the NP. Should a DNP be the entry-level education for NP practice? Briefly explain your answer.

End-of-the-year book value of year seven for this equipment : Calculate the annual depreciation allowance of Year 8 for this equipment. Calculate the end-of-the-year book value of Year 7 for this equipment.

What are the disadvantages of the one-to-many model : What are some advantages and disadvantages of the one-to-many model and the many-to-many model? Who Controls the Media?

User Account

All Pages