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Serggg [28]
3 years ago
11

IBM issues bonds with a sinking fund provision that the company can call 7% of the bonds at par value or the company can buy the

required bonds on the open market. IBM will choose to buy the required bonds on the open market if the bonds are traded at ______ in the market. Select one: a. $1850 b. $1116 c. $ 990 d. $1049 e. $1053
Business
1 answer:
Licemer1 [7]3 years ago
8 0

Answer:

c. $990

Explanation:

I am assuming that the par value of the bonds is $1,000. If the market price of the bonds is above $1,000, IBM can choose to redeem them at par value. E.g. if market value is $1,049, they can redeem them at $1,000 resulting in a $49 gain.

But if the bonds are selling below par value (under $1,000), then IBM should redeem them at market price since they will spend less money. E.g. if the market price is $990, why would they buy them at $1,000?

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An import tarif

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You place $4,00.00 in a bank account with an interest rate of 5.25% APR and another $2,000.00 in account with an interest rate o
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3 years ago
The YTM on a bond is the interest rate you earn on your investment if interest rates don’t change. If you actually sell the bond
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Answer:

Unitary cost= $147.02

Explanation:

Giving the following information:

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3 years ago
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