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# Claus & Company is planning a zero coupon bond issue. The bond has a par value of \$1,000, matures in 2 years, and will be sold at a price of \$826....

2. S. Claus & Company is planning a zero coupon bond issue. The bond has a par value of \$1,000, matures in 2 years, and will be sold at a price of \$826.45. The firm's marginal tax rate is 40 percent. What is the annual after-tax cost of debt to the company on this issue? (Points : 1)
4.0%
6.0%
8.0%
10.0%
12.0%
5. A 12-year bond that has a 12 percent coupon rate is currently selling for \$1,000, which equals the bond's face value. If interest is paid semiannually, the bond's yield to maturity is (Points : 1)
equal to 12 percent.
greater than 12 percent.
less than 12 percent.
None of the above is correct.

10. If interest rates fall from 8 percent to 7 percent, which of the following bonds will have the largest percentage increase in its value? (Points : 1)
A 10-year zero-coupon bond.
A 10-year bond with a 10 percent semiannual coupon.
A 10-year bond with a 10 percent annual coupon.
A 5-year zero-coupon bond.
A 5-year bond with a 12 percent annual coupon

2. S. Claus &amp; Company is planning a zero coupon bond issue. The bond has a par value of \$1,000, matures in 2 years, and will be sold at a price of \$826.45. The firm's
marginal tax rate is 40...

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