1. Seven years ago, Peterborough Trucking issued 15-year bonds with a face value of $1,000 each. Today, the market rate of return on these bonds is 7.9 percent and the market price is $984.20 The bonds pay interest semi-annually. What is the coupon rate?
A. 6.67 percent
B. 7.63 percent
C. 7.76 percent
D. 6.85 percent
2. Which of the following is True?
a. The riskiness of cash flow from the residual value of the real estate is always similar to the riskiness of cash flow from the corporation’s core business.
b. Real estate may have a lower current return than the typical investment that the corporation makes. Thus, owning the real estate may lower the company’s return on assets.
c. The capital commitments with owning are lower than the capital commitments associated with leasing.