A bond’s value is the same as its principal amount when the coupon rate is: the...
A bond’s value is the same as its principal amount when the
coupon rate is:
| the same as the required rate of return |
| higher than the required rate of return |
| lower than the required rate of return |
| lower than the inflation rate |
Homework Answers
Ans the same as the required rate of return
A bond’s value is the same as its principal amount when the coupon rate is the same as the required rate of return.
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A bond’s value is the same as its principal amount when the
coupon rate is:
the...
. If current market interest rates are higher than bond’s coupon rate, will the bond’s price...
. If current market interest rates are higher than bond’s coupon rate, will the bond’s price be higher or lower than the bond’s principal? Please explain why.
A $1,000 par value bond’s coupon rate is 4 percent per year but it pays coupon...
A $1,000 par value bond’s coupon rate is 4 percent per year but it pays coupon twice a year. The yield to maturity is 6 percent p.a. and it has 10 years to maturity. If the yield to maturity remains unchanged, what is the price 3 years from now? (please round to cent) A $1,000 par value bond’s coupon rate is 4 percent per year but it pays coupon twice a year. The yield to maturity is 6 percent p.a....
Which one is true? a. the higher the coupon payment, the lower the bond’s duration b....
Which one is true? a. the higher the coupon payment, the lower the bond’s duration b. the higher the yield to maturity, the lower the bond’s duration c. duration increases with maturity but at a decreasing rate d. all of the above
5. Bond valuation The process of bond valuation is based on the fundamental concept that the current price of a security...
5. Bond valuation The process of bond valuation is based on the fundamental concept that the current price of a security can be determined by calculating the present value of the cash flows that the security will generate in the future. There is a consistent and predictable relationship between a bond’s coupon rate, its par value, a bondholder’s required return, and the bond’s resulting intrinsic value. Trading at a discount, trading at a premium, and trading at par refer to...
How does a bond’s par value differ from the market value? Explain the difference between a...
How does a bond’s par value differ from the market value? Explain the difference between a bond’s coupon rate, current yield and required rate of return. After answering the question, provide a detailed example of a current bond (price, coupon, YTM, time, etc) and using the data you have created, provide a calculation for one of the variables (for example, what is the present value, or what are the coupon payments). You may choose which variable to calculate.
Harbuck’s Coffee semi-annual coupon, $1,000 par value bonds have 15 years to maturity. The bond’s annual...
Harbuck’s Coffee semi-annual coupon, $1,000 par value bonds have 15 years to maturity. The bond’s annual coupon rate is 7% and they sell for $1,035 each. These bonds can be called in 3 years at a call price of $1,050. What is the bond’s yield to call? What is the bond’s yield to maturity? Which return would you expect to earn?
3. Bond valuation The process of bond valuation is based on the fundamental concept that the...
3. Bond valuation The process of bond valuation is based on the fundamental concept that the current price of a security can be determined by calculating the present value of the cash flows that the security will generate in the future. There is a consistent and predictable relationship between a bond’s coupon rate, its par value, a bondholder’s required return, and the bond’s resulting intrinsic value. Trading at a discount, trading at a premium, and trading at par refer to...
QUESTION 23 When a bond's coupon rate is less than its yield-to-maturity the bond will be...
QUESTION 23 When a bond's coupon rate is less than its yield-to-maturity the bond will be a discount bond. True False QUESTION 24 Exposure to non-systematic risk is rewarded with higher expected return. Conversely, exposure to systematic risk is not rewarded with higher expected returns True False QUESTION 25 You invest the same dollar amount in 5 different securities. All else equal, diversification produces the greatest benefits if the correlation coefficients for the returns of the 5 securities are close...
1- What is the difference between a bond’s coupon rate and its market interest rate (yield)?...
1- What is the difference between a bond’s coupon rate and its market interest rate (yield)? 2- How do credit (debit) ratings affect the cost of borrowing for a company? 3- Read the article entitled “The Lawsuits Keep Coming for J&J” and explain how the lawsuits can impact J&J’s financial statements.
Other things remaining the same, higher is the required return a. lower is the value of...
Other things remaining the same, higher is the required return a. lower is the value of a bond b. higher is the value of a stock c. lower is the value of a stock d. both a and c M=1000, n=20, coupon rate = .08, discount rate = .06. The value of the bond is approximately a. 1229.4 b. 917.6 c. 1129.4 d. none of the above
QUESTION 23 When a bond's coupon rate is less than its yield-to-maturity the bond will be a discount bond. True False QUESTION 24 Exposure to non-systematic risk is rewarded with higher expected return. Conversely, exposure to systematic risk is not rewarded with higher expected returns True False QUESTION 25 You invest the same dollar amount in 5 different securities. All else equal, diversification produces the greatest benefits if the correlation coefficients for the returns of the 5 securities are close...
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