Assume that in January 2012, Vivendi announced a €1 billion bond issuance. The b
ID: 2486415 • Letter: A
Question
Assume that in January 2012, Vivendi announced a €1 billion bond issuance. The bonds have a coupon rate of 6.25% payable semiannually. According to the company's website, the bonds have been assigned credit ratings of BBB (stable outlook) by Standard and Poor's, Baa2 (stable outlook) by Moody's, and BBB (stable outlook) by Fitch. Which of the following is not true? A. The yield on these bonds would have been lower if Standard and Poor's, Moody's, and Fitch had assigned higher credit ratings. B. The periodic interest payment will be €31.250 million. C. The coupon rate on these bonds would have been higher if Standard and Poor's, Moody's, and Fitch had assigned lower credit ratings. D. The periodic interest expense will depend on the bond's yield. E. None of the above
Explanation / Answer
The coupon rate on these bonds would have been higher if Standard and Poor's, Moody's and Fitch had assigned lower credit ratings.
This statement is not True.