Which of the following statements is CORRECT? Question 14 options: 10-year, zero coupon bonds have more...
Which of the following statements is CORRECT?
Question 14 options:
10-year, zero coupon bonds have more reinvestment risk than 10-year, 10% coupon bonds.
A 10-year, 10% coupon bond has less reinvestment risk than a 10-year, 5% coupon bond (assuming all else equal).
The total (rate of) return on a bond during a given year is the sum of the coupon interest payments received during the year and the change in the value of the bond from the beginning to the end of the year, divided by the bond's price at the beginning of the year.
The price of a 20-year, 10% bond is less sensitive to changes in interest rates than the price of a 5-year, 10% bond.
A $1,000 bond with $100 annual interest payments that has 5 years to maturity and is not expected to default would sell at a discount if interest rates were below 9% and at a premium if interest rates were greater than 11%.
Homework Answers
The correct answer is:-
c) The total (rate of) return on a bond during a given year is the sum of the coupon interest payments received during the year and the change in the value of the bond from the beginning to the end of the year, divided by the bond's price at the beginning of the year
Add Answer to:
Which of the following statements is CORRECT?
Question 14 options:
10-year, zero coupon bonds have more...
Which of the following statements is CORRECT? O 10-year, zero coupon bonds have more reinvestment risk...
Which of the following statements is CORRECT? O 10-year, zero coupon bonds have more reinvestment risk than 10-year, 10 % coupon bonds OA 10-year, 10% coupon bond has less reinvestment risk than a 10-year, 5 % coupon bond (assuming all else equal). The total (rate of) return on a bond during a given year is the sum of the coupon interest payments received during the year and the change in the value of the bond from the beginning to the...
Bonds often pay a coupon twice a year. For the valuation of bonds that make semiannual payments, the number of periods...
Bonds often pay a coupon twice a year. For the valuation of bonds that make semiannual payments, the number of periods doubles, whereas the amount of cash flow decreases by half. Using the values of cash flows and number of periods, the valuation model is adjusted accordingly. Assume that a $1,000,000 par value, semiannual coupon Government of Canada bond with two years to maturity (YTM) has a coupon rate of 6%. The yield to maturity of the bond is 9.90%....
(Bond valuation) Doisneau 16-year bonds have an annual coupon interest of 8 percent, make interest payments...
(Bond valuation) Doisneau 16-year bonds have an annual coupon interest of 8 percent, make interest payments on a semiannual basis, and have a $1,000 par value. If the bonds are trading with a market's required yield to maturity of 14 percent, are these premium or discount bonds? Explain your answer. What is the price of the bonds? a. If the bonds are trading with a yield to maturity of 14%, then (Select the best choice below.) A. the bonds...
7. Valuing semiannual coupon bonds Bonds often pay a coupon twice a year. For the valuation...
7. Valuing semiannual coupon bonds Bonds often pay a coupon twice a year. For the valuation of bonds that make semiannual payments, the number of periods doubles, whereas the amount of cash flow decreases by half. Using the values of cash flows and number of periods, the valuation model is adjusted accordingly. Assume that a $1,000,000 par value, semiannual coupon US Treasury note with two years to maturity has a coupon rate of 4%. The yield to maturity (YTM) of...
4.Which one of the following statements about the approach to bond pricing is NOT true? Select...
4.Which one of the following statements about the approach to bond pricing is NOT true? Select one: A. To calculate a bond's price, one needs to calculate the present value of the bond's expected cash flows. B. The value, or price, of any asset is the future value of its cash flows. 6.Which one of the following statements is NOT true? Select one: A. The yield to maturity of a bond is the discount rate that makes the present value...
An investor has two bonds in his portfolio that have a face value of $1,000 and pay a 9% annual coupon. Bond L matures i...
An investor has two bonds in his portfolio that have a face value of $1,000 and pay a 9% annual coupon. Bond L matures in 13 years, while Bond S matures in 1 year. Assume that only one more interest payment is to be made on Bond S at its maturity and that 13 more payments are to be made on Bond L. What will the value of the Bond L be if the going interest rate is 5%? Round...
QUESTION 4 IBM's bonds currently sell for $1,040 and have a par value of $1,000. They...
QUESTION 4 IBM's bonds currently sell for $1,040 and have a par value of $1,000. They pay $65 annual coupon and have a 15 year maturity, but may be called in 5 years at $1,000. What is their Yield to Maturity (YTM)? 5.78% 6.39% 6.71% 6.09% QUESTION 5 Bob's corporation's bonds make an annual payment of 7.35%. The bonds have a par value of $1,000, a current price of $1,130, and mature in 12 years. What is the yield to...
An investor has two bonds in his portfolio that have a face value of $1,000 and...
An investor has two bonds in his portfolio that have a face value of $1,000 and pay a 12% annual coupon. Bond L matures in 15 years, while Bond S matures in 1 year a. What will the value of the Bond L be if the going interest rate is 7%, 8%, and 13%? Assume that only one more interest payment is to be made on Bond S at its maturity and that 15 more payments are to be made...
An investor has two bonds in his portfolio that have a face value of $1,000 and...
An investor has two bonds in his portfolio that have a face value of $1,000 and pay a 12% annual coupon. Bond L matures in 15 years, while Bond S matures in 1 year. What will the value of the Bond L be if the going interest rate is 7%, 9%, and 13%? Assume that only one more interest payment is to be made on Bond S at its maturity and that 15 more payments are to be made on...
q9 An investor has two bonds in his portfolio that have a face value of $1,000...
q9
An investor has two bonds in his portfolio that have a face value of $1,000 and pay a 13% annual coupon. Bond L matures in 19 years, while Bond S matures in 1 year. a. What will the value of the Bond L be if the going interest rate is 7%, 9%, and 14%? Assume that only one more interest payment is to be made on Bond S at its maturity and that 19 more payments are to be...
Which of the following statements is CORRECT? O 10-year, zero coupon bonds have more reinvestment risk than 10-year, 10 % coupon bonds OA 10-year, 10% coupon bond has less reinvestment risk than a 10-year, 5 % coupon bond (assuming all else equal). The total (rate of) return on a bond during a given year is the sum of the coupon interest payments received during the year and the change in the value of the bond from the beginning to the...
Bonds often pay a coupon twice a year. For the valuation of bonds that make semiannual payments, the number of periods doubles, whereas the amount of cash flow decreases by half. Using the values of cash flows and number of periods, the valuation model is adjusted accordingly. Assume that a $1,000,000 par value, semiannual coupon Government of Canada bond with two years to maturity (YTM) has a coupon rate of 6%. The yield to maturity of the bond is 9.90%....
7. Valuing semiannual coupon bonds Bonds often pay a coupon twice a year. For the valuation of bonds that make semiannual payments, the number of periods doubles, whereas the amount of cash flow decreases by half. Using the values of cash flows and number of periods, the valuation model is adjusted accordingly. Assume that a $1,000,000 par value, semiannual coupon US Treasury note with two years to maturity has a coupon rate of 4%. The yield to maturity (YTM) of...
An investor has two bonds in his portfolio that have a face value of $1,000 and pay a 12% annual coupon. Bond L matures in 15 years, while Bond S matures in 1 year a. What will the value of the Bond L be if the going interest rate is 7%, 8%, and 13%? Assume that only one more interest payment is to be made on Bond S at its maturity and that 15 more payments are to be made...
q9
An investor has two bonds in his portfolio that have a face value of $1,000 and pay a 13% annual coupon. Bond L matures in 19 years, while Bond S matures in 1 year. a. What will the value of the Bond L be if the going interest rate is 7%, 9%, and 14%? Assume that only one more interest payment is to be made on Bond S at its maturity and that 19 more payments are to be...
Most questions answered within 3 hours.
-
Water at gauge pressure of 3.8 atmospheres at street level
enters an office building at 0.60...
asked 8 minutes ago -
Quick question, I want to know how to convert decimal numbers to
binary number, when i...
asked 29 minutes ago -
You found out that now you are going to receive payments of
$8,500 for the next...
asked 33 minutes ago -
17.
Technician A says that leaking components are usually repaired
rather than replaced. Technician B says...
asked 33 minutes ago -
A) An Operon is:?
1- A gene that affect another gene
transcription.
2. A gene coding...
asked 40 minutes ago -
When opening a file, use this method to determine whether a file
exists before you attempt...
asked 44 minutes ago -
Sales total $300,000 when variable costs total $180,000 and
fixed costs are $60,000. Breakeven sales total:...
asked 51 minutes ago -
1)
To calculate the depth of a water well, an explorer drops a stone and with...
asked 48 minutes ago -
0.429-g sample of gas occupies 125 mL at 60. cm of Hg and 25°C.
The molar...
asked 50 minutes ago -
The
pH of a 0.90M solution of boric acid (H3BO3) is measured to be
4.64.
Calculate...
asked 1 hour ago -
on april 10, a company acquired land valued at $58,000 in
exchange for 1,000 shares of...
asked 1 hour ago -
Is
ampicillin or solvents (such as acetone) more effective at killing
off bacteria, in general? Explain...
asked 1 hour ago