rate positively ..
ans 10 | Correct answer is option | ||
a) above; above | |||
ans 11 | Correct answer is option | ||
c) below; below | |||
ans 12 | Correct answer is option | ||
c) Decrease, decrease | |||
ans 13 | Correct answer is option | ||
a. increase, increase | |||
9) Taussig Corp's bonds currently sell for $1.150. They have a 6.75% annual coupon rate 15-year...
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...
For all the questions below select the appropriate answer: MP IMP Interest rate i INTY) Real money balances The money market in the diagram presented shows that with unchanged demand for money the market adjustment to an increase in real money supply: changes the price level to hold the real money supply constant has no effect on interest rates or bond prices. raises the equilibrium interest rate from it to lo as portfolio managers bid bond prices down. lowers the...
6, what is the value of 15-year corporate bonds, with a coupon rate of 9%, if current interest rates on similar bonds is 8%? How much would the value change if interest rates increased to 10%? Under what conditions will this bond trade at par (face value)?
1. An investor purchases an annual coupon bond with a 6% coupon rate and exactly 20 years remaining until maturity at a price equal to par value. The investor’s investment horizon is eight years. The approximate modified duration of the bond is 11.470 years. What is the duration gap at the time of purchase? (Hint: use approximate Macaulay duration to calculate the duration gap) 2. An investor plans to retire in 10 years. As part of the retirement portfolio, the...
Question 27 1 pts A 12-year bond has an annual coupon of 9%. The coupon rate will remain fixed until the bond matures. The bond has a yield to maturity of 7%. Which of the following statements is CORRECT? O If market interest rates decline, the price of the bond will O The bond is currently selling at a price below its par O If market interest rates remain unchanged, the bond's also decline. value. price one year from now...
Bond A has a 12% coupon and Bond B has an 8% coupon. Both bonds have a 10% YTM and five years to maturity. Which of the following statements is most correct? O a If market interest rates were to increase, Bond B would have the greatest increase in price b. If market interest rates remain unchanged, Bond A's price will be higher one year from now than it is today c. Bond A has lower reinvestment rate risk than...
(Bond valuation) Enterprise, Inc. bonds have an annual coupon rate of 15 percent. The interest is paid semiannually and the bonds mature in 12 years. Their par value is $1,000. If the market's required yield to maturity on a comparable-risk bond is 12 percent, what is the value of the bond? What is its value if the interest is paid annually? a. The value of the Enterprise bonds if the interest is paid semiannually is $ _______ . (Round to the...
You are considering an investment in the bonds of the Front Range Electric Company. The bonds pay interest quarterly, will mature in 15 years, and have a coupon rate of 4.50% on a face value of $1,000. Currently, the bonds are selling for $950. g) If market interest rates remain unchanged, do you think it is likely that the bond will be called in three years? Why or why not?h) Create a chart that shows the relationship of the bond’s price to...
You are considering an investment in the bonds of the Front Range Electric Company. The bonds pay interest quarterly, will mature in 15 years, and have a coupon rate of 4.50% on a face value of $1,000. Currently, the bonds are selling for $950. g) If market interest rates remain unchanged, do you think it is likely that the bond will be called in three years? Why or why not?h) Create a chart that shows the relationship of the bond’s price to...
Masters Corp. issues two bonds with 15-year maturities. Both bonds are callable at $1,120. The first bond is issued at a deep discount with a coupon rate of 7% to yield 14.4%. The second bond is issued at par value with a coupon rate of 15.60% a. What is the yield to maturity of the par bond? (Round your answer to 2 decimal places.) Yield to maturity b. If you expect rates to fall substantially in the next two years,...