Questions - help

Discussion in 'Economics' started by Abner, Mar 13, 2006.

  1. Abner



    I am new here and I am hoping to receive some help in regards to a Financial management class I am taking. I am stumped by the following questions:

    Par value is not necessarily the actual price at which common stock is issued by the firm, but it does constitute the maximum legal liability per share in the event of bankruptcy.

    a. true
    b. false

    The striking price is different from the exercise price and deals with convertibles rather than with warrants.

    a. true
    b. false

    Rollincoast Inc. issued BBB bonds two years ago that provided a yield to maturity of 11.5 percent. Long-term risk-free government bonds were yielding 8.7 percent at that time. The current risk premium on BBB bonds versus government bonds is half what it was two years ago. If the risk-free long-term governments are currently yielding 7.8 percent, then at what rate should Rollincoast expect to issue new bonds?

    a. 7.8%
    b. 8.7%
    c. 9.2%
    d. 10.2%
    e. 12.9%

    Your help would be greatly appreciated. Thank you.

    Abner :)
  2. Are you serious? Must be a 1st year finance class. How could you NOT find this information out by reading your text?

  3. Abner


    Obviously, this subject matter is easy for you. Not so for me. Thanks anyway.