Moon Software Inc. is planning to issue two types of 25-year, noncallable bonds to raise a total of $6 million, $3 million from each type of bond. First, 3,000 bonds with a 10% semiannual coupon will be sold at their $1,000 par value to raise $3,000,000. These are called "par" bonds. Second, Original Issue Discount (OID) bonds, also with a 25-year maturity and a $1,000 par value, will be sold, but these bonds will have a semiannual coupon of only 6.75%. The OID bonds must be offered at below par in order to provide investors with the same effective yield as the par bonds. How many OID bonds must the firm issue to raise $3,000,000? Disregard flotation costs, and round your final answer up to a whole number of bonds.
A. 3,370
B. 4,906
C. 3,285
D. 4,479
E. 4,266
Answer: E
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There are two methods of amortizing a bond discount or premium: the straight-line method and the double-declining-balance method
a. True b. False Indicate whether the statement is true or false
Unlike quotas, voluntary export restraints (VERs) are imposed by
A. the importing company. B. either the importing or exporting country's government; what matters is that they are voluntary. C. the importing country's government. D. the exporting country's government.
Issuing stocks in foreign markets
A. extends the firm's investor pool and often reduces cost of capital. B. causes currency problems. C. influences local legal systems, in the case of prosecution. D. supports international debt markets.
In 2007-2008, more than 12,000 members of the Writers Guild of America went out on strike after contract negotiations with the Alliance of Motion Picture and Television Producers (AMPTP) came to impasse. The strike started in November, 2007 and concluded in February, 2008 and, by some estimates, cost the industry around $2 billion. Given the expense of the strike to the industry and lost income to the writers, what other alternatives might the writers have considered in their quest to pressure the AMPTP to make concessions? Why do you think the Writers Guild decided to strike instead of pursuing these less costly alternatives?
What will be an ideal response?