Explain the rationale for why anyone would choose to buy a zero coupon bond that pays no interest prior to maturity and pays only the face value of the bond at maturity
What will be an ideal response?
Zero coupon bonds pay only the face value at maturity and nothing else. Thus these bonds may be attractive to investors that have specific maturity needs such as saving for a young child's eventual college tuition. Zero coupon bonds also eliminate the concern of reinvestment rate risk, or what to do the intermediate cash flows that occur prior to maturity with more conventional coupon bonds. Finally, zero coupon bonds sell at a deep discount from face value.
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Management is a user of financial analysis. Which of the following comments does not represent a fair statement as to the management perspective?
a. Management is interested in the view of investors. b. Management is interested in the view of creditors. c. Management is interested in the financial structure of the entity. d. Management is interested in the asset structure of the entity. e. Management is always interested in maximum profitability.
Which of the following is an area that organizational neuroscience may help behavioral scientists better understand?
A. negative affect B. emotional intelligence C. understanding what happens in the brain when emotions are experienced by people in organizations D. econometrics
Taggart Company has a P/E ratio of 13 in year 2016 and 12.5 in 2017. In 2018, its P/E ratio is 19.5. The best way to interpret these data is to conclude that:
A. the stock is underpriced and should be bought. B. other financial results and news should be examined to determine the cause of the P/E ratio change. C. the stock has great growth capacity and should be bought. D. the stock is overpriced and should be sold.
J & J Products uses operational costing. One of their customers has requested 1,000 units of an identical product. J & J estimates the following will be incurred to fulfill the customer order: Total direct materials $2,000 Total direct labor hours 50
hours Direct labor cost per hour $20 per hour In addition, J & J allocates overhead based on direct labor cost. At the beginning of this year, they estimated overhead costs would total $800,000 and direct labor would cost a total of $3,200,000. Required: A. What will be the predetermined overhead rate used during the year? B. What will be the total manufacturing costs for the above customer's order?