Healthy Co. issued 15-year bonds with a maturity value of $1,000,000 as part of its...
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Healthy Co. issued 15-year bonds with a maturity value of $1,000,000 as part of its goal to use more leverage as debt would provide. The bonds will pay a stated rate of interest, annually. The proceeds of the bond issuance will be used to buy back stock (i.e. Treasury stock)
Which ONE of the following statements is true if the bonds were issued at their par value of $1,000,000?
A. The market yield rate of interest exceeded the coupon rate.
B. The market cash rate of interest exceeded the coupon rate.
C. The market yield rate of interest was less than the coupon rate.
D. The market yield rate of interest was equal to the coupon rate.
2. During the year, Cellular Land, Inc., a profitable company in business for three years, issued 1,500 of its authorized common stock shares - with a $1.00 stated (par) value PER SHARE - for $15 per share, and also declared and paid out cash dividends totaling $0.25 per share. By what amount does the company's contributed capital increase as a result of these events? Select ONE answer.
A. $22,500
B. $1,500
C. $21,750
D. $22,125
E. None of the dollar answers are correct.
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