Homework Answers
Correct answer is - C (Coupon Rate)
Because of coupon rate is the amount of interest the bondholder receives based on the bond's nominal value. So it is the required return on a bond.
Whereas yield to maturity is the total return anticipated on a bond if held until it matures.
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Which of the following is the name used to refer specifically to the required return on...
How can a bond have a negative rate of return? A) if the current yield is...
How can a bond have a negative rate of return? A) if the current yield is greater than the coupon rate B) if the current yield is less than the coupon rate C) if the rate of capital gains is less than the current yield D) if the rate of capital loss exceeds the current yield
9. H ? ow can a bond have a negative rate of return A) if the...
9. H ? ow can a bond have a negative rate of return A) if the current yield is greater than the coupon rate B) if the current yield is less than the coupon rate C) if the rate of capital gains is less than the current yield D) if the rate of capital loss exceeds the current yield 10. What is the rate of return on a bond with a coupon of $55 that was purchased for $900 and...
Last year Carson Industries issued a 10-year, 13% semiannual coupon bond at its par value of...
Last year Carson Industries issued a 10-year, 13% semiannual coupon bond at its par value of $1,000. Currently, the band can be called in 6 years at a price of $1,065 and it sells for $1,270. a. What are the bond's nominal yield to maturity and its nominal yield to call? Do not round intermediate calculations. Round your answers to two decimal places. YTM: YTC: Would an investor be more likely to earn the YTM or the YTC? b. What...
29) The rate of return required by investors in the market for owning a bond is...
29) The rate of return required by investors in the market for owning a bond is called the: a) Coupon. b) Face value. c) Maturity d) Yield to maturity. e) Coupon rate.
Variable Name options are: "Bond' semiannual coupon payment" "bonds annual coupon payment" "bondholders required return" For...
Variable Name options are:
"Bond' semiannual coupon payment" "bonds annual coupon payment"
"bondholders required return"
For example, assume Noah wants to earn a return of 15.75% and is offered the opportunity to purchase a $1,000 par value bond that pays a 18.00% coupon rate (distributed semiannually) with three years remaining to maturity. The following formula can be used to compute the bond's intrinsic value Intrinsic Value zGL t 7. 07 Complete the following table by identifying the appropriate corresponding variables...
2. There are two bonds that a bond fund manager is considering. Bond A has a...
2. There are two bonds that a bond fund manager is considering. Bond A has a coupon rate of 5% and Bond B has a coupon rate of 8 %. Both bonds are paying interest semi-annually, have a par value of $1,000 anda maturity of 20 years. If the current YTM for both bonds is 6%, what is their current price? If the YTM changed to 7% , what would be their new current price? Which bond is more elastic...
Consider the following bond: Face value = $1000; coupon rate = 8%; yield to maturity =...
Consider the following bond: Face value = $1000; coupon rate = 8%; yield to maturity = 5%; maturity = 5 years. a. If interest payments are made annually, what is the value of this bond? What are this year's current yield to capital gains yield? b. What is the value of the bond 3 years from now? What are the current yield to capital gains yield to be 3 years from now? c. thank you.
1. Which of the following statement is correct about systematic risk and non-systematic risk? A. Systematic...
1. Which of the following statement is correct about systematic risk and non-systematic risk? A. Systematic risk can be eliminated by proper diversification. B. Fluctuation in oil price is a non-systematic risk. C. Financial markets reward you for bearing systematic risk. D. A stock’s systematic risk is measured by the standard deviation of its return. 2. As discussed in class, based on the CAPM, an electric utility will have the greater cost of equity capital than an airline company. True...
eBook Problem Walk-Through Last year Carson Industries issued a 10-year, 14 % semiannual coupon bond at...
eBook Problem Walk-Through Last year Carson Industries issued a 10-year, 14 % semiannual coupon bond at its par value of $1,000. Currently, the 6 gos 7. bond can be called in 6 years at a price of $1,060 and it sells for $1,300. a. What are the bond's nominal yield to maturity and its nominal yield to call? Do not round intermediate calculations. Round your answers to two decimal places. 9. YTM: % YTC: Would an investor be more likely...
Which of the following statements is CORRECT? A bond's current yield must always be either equal...
Which of the following statements is CORRECT? A bond's current yield must always be either equal to its yield to maturity or between its yield to maturity and its coupon rate. If a bond sells at par, then its current yield will be less than its yield to maturity. If a bond sells for less than par, then its yield to maturity is less than its coupon rate. A discount bond's price declines each year until it matures, when its...
9. H ? ow can a bond have a negative rate of return A) if the current yield is greater than the coupon rate B) if the current yield is less than the coupon rate C) if the rate of capital gains is less than the current yield D) if the rate of capital loss exceeds the current yield 10. What is the rate of return on a bond with a coupon of $55 that was purchased for $900 and...
Last year Carson Industries issued a 10-year, 13% semiannual coupon bond at its par value of $1,000. Currently, the band can be called in 6 years at a price of $1,065 and it sells for $1,270. a. What are the bond's nominal yield to maturity and its nominal yield to call? Do not round intermediate calculations. Round your answers to two decimal places. YTM: YTC: Would an investor be more likely to earn the YTM or the YTC? b. What...
29) The rate of return required by investors in the market for owning a bond is called the: a) Coupon. b) Face value. c) Maturity d) Yield to maturity. e) Coupon rate.
Variable Name options are:
"Bond' semiannual coupon payment" "bonds annual coupon payment"
"bondholders required return"
For example, assume Noah wants to earn a return of 15.75% and is offered the opportunity to purchase a $1,000 par value bond that pays a 18.00% coupon rate (distributed semiannually) with three years remaining to maturity. The following formula can be used to compute the bond's intrinsic value Intrinsic Value zGL t 7. 07 Complete the following table by identifying the appropriate corresponding variables...
2. There are two bonds that a bond fund manager is considering. Bond A has a coupon rate of 5% and Bond B has a coupon rate of 8 %. Both bonds are paying interest semi-annually, have a par value of $1,000 anda maturity of 20 years. If the current YTM for both bonds is 6%, what is their current price? If the YTM changed to 7% , what would be their new current price? Which bond is more elastic...
eBook Problem Walk-Through Last year Carson Industries issued a 10-year, 14 % semiannual coupon bond at its par value of $1,000. Currently, the 6 gos 7. bond can be called in 6 years at a price of $1,060 and it sells for $1,300. a. What are the bond's nominal yield to maturity and its nominal yield to call? Do not round intermediate calculations. Round your answers to two decimal places. 9. YTM: % YTC: Would an investor be more likely...
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