Question: 1 when a bond is trading at a discount which...
1. When a bond is trading at a discount, which of the following is correct?
a. Coupon rate > Current yield > Yield to Maturity
b. Coupon rate = Current yield = Yield to Maturity
c. Coupon rate < Current yield < Yield to Maturity
d. Coupon rate = Current yield < Yield to Maturity
2. The company has $100 million of total assets and $30 million of liabilities. In the current year, it reports a net income of $1.4 million. What is the Return on Equity (ROE)?
3. Company A wants to borrow $200,000 to fulfill a part of its upcoming investment project. A bank offers an option with $30,000 annual payment in the next 10 years. What is the cost of debt for this offer, assuming the bank provides the free loan service?