Which of the following is the best representation of a firmâs effective or true cost of borrowing?
A Coupon rate
B Current yield
C Yield to maturity
Which of the following is the best representation of a firmâs effective or true cost of borrowing?
| A | Coupon rate |
| B | Current yield |
| C | Yield to maturity |
Related questions
1.
The current dividend yield on Clayton's Metals common stock is3.2 percent. The company just paid a $1.48 annual dividend andannounced plans to pay $1.54 next year. The dividend growth rate isexpected to remain constant at the current level. What is therequired rate of return on this stock?
7.25 percent
7.82 percent
8.08 percent
8.75 percent
8.39 percent
2.
Which one of the following is computed by dividing next year'sannual dividend by the current stock price?
total yield
dividend yield
yield to maturity
growth rate
capital gains yield
3.
The bonds issued by Stainless Tubs bear an 8 percent coupon,payable semiannually. The bonds mature in 11 years and have a$1,000 face value. Currently, the bonds sell for $952. What is theyield to maturity?
7.92 percent
9.20 percent
8.69 percent
7.87 percent
8.08 percent
4.
Which one of the following applies to a premium bond? |
| Coupon rate > yield-to-maturity > current yield. |
| Coupon rate > current yield > yield to maturity. |
| Coupon rate < yield to maturity < current yield. |
Yield to maturity > current yield > coupon rate.
| Coupon rate = current yield = yield-to-maturity. Please answer all the questions. Thank you. |
| A 20-year maturity bond with par value of $1,000 makes semiannual coupon payments at a coupon rate of 6%. Find the bond equivalent and effective annual yield to maturity of the bond for the following bond prices. (Round your answers to 2 decimal places. Omit the "%" sign in your response.) |
| Bond | Bond Equivalent Annual | Effective Annual | ||
| Prices | Yield to Maturity | Yield to Maturity | ||
| a. | $ | 930 | % | % |
| b. | $ | 1,000 | % | % |
| c. | $ | 1,030 | % | % |
