A European company issues a five-year euro-denominated bond with a face value of EUR50,000,000. The company then enters into a five-year currency swap with a bank to convert the EUR exposure into USD
A. EUR 1,250,000.
B. USD 1,750,000.
C. EUR 1,125,000.
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Which of the following measures of profit is most likely necessary for a firm to stay in business in the long run?
A. Economic
B. Normal
C. Accounting
If the stated annual interest rate is 9% and the frequency of compounding is daily, the effective annual rate (EAR) is closest to:
A. 9.42%.
B. 9.00%.
C. 9.86%.
Holding all other characteristics the same, the bond exposed to the greatest level of reinvestment risk is most likely the one selling at:
A discount.
B. A premium.
C. par.
A firms estimated costs of debt, preferred stock, and common stock are 12%,17%, and 20%, respectively. Assuming equal funding from each source and a marginal tax rate of 40%, the weighted average cost
A. 13.9%.
B. 16.3%.
C. 14.7%.