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Which of the ratings would indicate a junk bond

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Reference no: EM132869237

Problem 1: Which of the following ratings would indicate a "junk bond?"

A. A BBB- rating from Standard & Poors.

B. A Ba rating by Moody's.

C. A Baa3 rating by Moody's.

D. BBB(low) by DBRS.

Problem 2: Which of the following is the correct order of steps to take when making a decision to refund a bond issue?

A. Calculate the PV of interest savings and calculate the net investment

B. Calculate the PV of interest savings, calculate the PV or refunding, calculate the net investment.

C. Calculate the net investment, calculate the PV or refunding, calculate the PV of interest savings.

D. Calculate the PV of interest savings, calculate the net investment, calculate the PV or refunding.

Problem 3: Which of the following statements regarding the calculation and use of inflation premiums is true?

A. All of these answers.

B. An inflation premium is caused by lender compensating for expected inflation.

C. The inflation premium varies based on each analyst's expectations regarding future inflation.

D. Actual interest rates are viewed as being the nominal interest rate minus the inflation premium.

Reference no: EM132869237

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