Answer :
4.2. b) A zero-coupon bond.
4.3. d) Coupon rate.
4.4. c) A bond with a BB rating.
4.5. a) The YTM is more than the coupon rate.
4.6. c) Receive preferential treatment in terms of dividend payments.
4.7. b) Have voting rights at annual general meetings.
4.8. a) The par value of the Vuvuzela Company’s ordinary shares is 1c
4.9. d) R150 000.
4.2. b) A zero-coupon bond.
A bond that makes no coupon payments during the life of the bond but is sold at a considerable discount is known as a zero-coupon bond.
4.3. d) Coupon rate.
The coupon divided by the nominal value represents the coupon rate.
4.4. c) A bond with a BB rating.
Bonds with lower credit ratings have higher default rates and hence have a higher yield to compensate for the higher risk.
4.5. a) The YTM is more than the coupon rate.
If a bond is R1 000 at maturity and the bond currently sells for R990, then the yield-to-maturity is more than the coupon rate.
4.6. c) Receive preferential treatment in terms of dividend payments.
Preference shareholders receive preferential treatment in terms of dividend payments.
4.7. b) Have voting rights at annual general meetings.
Ordinary shareholders have voting rights at annual general meetings.
4.8. a) 1c.The par value of the Vuvuzela Company’s ordinary shares is 1c because the company issued one million ordinary shares at a value of 1c.
4.9. d) R150 000.
The market value of the Vuvuzela Company’s ordinary shares is R150 000 because the current price per share is 15c. Therefore, one million ordinary shares are worth R150 000.
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