Homework Answers
rate positively .. let me know if you need any clarification..
| Ans 1 | Correct answer is option : | |||||||
| The 10-year bond has more interest rate risk | ||||||||
| Ans 2 | Correct answer is option : | |||||||
| …. Decline in interest rate might lead to LESS annual income from her investment. | ||||||||
| If interest rates..INCREASES , the value of earning from …. | ||||||||
| A 20 -year Zero coupon bond | ||||||||
| Ans 3 | Correct answer is option : | |||||||
| Statement is False | ||||||||
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Assignment 07-Bonds and Their Valuation The curves on the following graph show the prices of two...
The curves on the following graph show the prices of two 10% annual coupon bonds at...
The curves on the following graph show the prices of two 10% annual coupon bonds at various interest rates. BOND VALUE ($1 2000 1750 1500 1250 1000 1-Year Bond 10-Year Bond 4 8 12 16 20 INTEREST RATE (%) Based on the graph, which of the following statements is true? O Both bonds have equal interest rate risk The 1-year bond has more interest rate risk. Neither bond has any interest rate risk. The 10-year bond has more interest rate...
O v e wnen investing in bonds is important The curves on the following graph show...
O v e wnen investing in bonds is important The curves on the following graph show the prices of two 10% annual coupon bonds at various interest rates BOND VALUE 151 Based on the graph, which of the following statements is true? Neither bond has any interest rate risk. O The 1-year bond has more interest rate nisk Both bonds have equal interest rate risk The 10-year bond has more interest rate risk Frank Barlown is retiring soon, so he's...
Ch 07: Assignment - Bonds and Their Valuation 6. Bond yields and prices over time A...
Ch 07: Assignment - Bonds and Their Valuation 6. Bond yields and prices over time A bond Investor is analyzing the following annual coupon bonds: Annual Coupon Rate Issuing Company Johnson Incorporated Smith, LLC Irwin Corporation 6% 12% 9% Each bond has 10 years until maturity and the same level of risk. Their yield to maturity (TM) is 9%. Interest rates are assumed to remain constant over the next 10 years. BOND VALUE ISI 1200 1100 1 B YEARS TO...
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...
JUST NEED THE BLANK WORDED QUESTION ANS. NOT MULTIPLE CHOICE 1st blank options = decrease, increase...
JUST NEED THE BLANK WORDED QUESTION ANS.
NOT MULTIPLE CHOICE
1st blank options = decrease, increase
2nd blank options = less, more
5. Risks of investing in bonds A security with higher risk will have a higher expected return. A bond's risk level is reflected in its yield, but understanding the different risks involved when investing in bonds is important. The curves on the following graph show the prices of two 10% annual coupon bonds at various interest rates." BOND...
The prices of low-coupon bonds tend to be less sensitive to a given change in interest...
The prices of low-coupon bonds tend to be less sensitive to a given change in interest rates than high coupon bonds, other things held constant. O O True False There is an inverse relationship between bonds' quality ratings and their required rates of return. Thus, the required return is lowest for AAA-rated bonds, and required returns increase as the bond ratings get lower. O True or False What's TRUE regarding long-term and short-term bonds (assume they have the same par...
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...
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...
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...
7-3: Bond Valuation Bond valuation An Investor has two bonds in his portfolio that both have...
7-3: Bond Valuation Bond valuation An Investor has two bonds in his portfolio that both have a face value of $1,000 and pay a 11% annual coupon. Bond L matures in 14 years, while Bond S matures in 1 year Assume that only one more interest payment is to be made on Bond Sat its maturity and that 14 more payments are to be made on Bond L a. What will the value of the Bond L be if the...
The curves on the following graph show the prices of two 10% annual coupon bonds at various interest rates. BOND VALUE ($1 2000 1750 1500 1250 1000 1-Year Bond 10-Year Bond 4 8 12 16 20 INTEREST RATE (%) Based on the graph, which of the following statements is true? O Both bonds have equal interest rate risk The 1-year bond has more interest rate risk. Neither bond has any interest rate risk. The 10-year bond has more interest rate...
O v e wnen investing in bonds is important The curves on the following graph show the prices of two 10% annual coupon bonds at various interest rates BOND VALUE 151 Based on the graph, which of the following statements is true? Neither bond has any interest rate risk. O The 1-year bond has more interest rate nisk Both bonds have equal interest rate risk The 10-year bond has more interest rate risk Frank Barlown is retiring soon, so he's...
Ch 07: Assignment - Bonds and Their Valuation 6. Bond yields and prices over time A bond Investor is analyzing the following annual coupon bonds: Annual Coupon Rate Issuing Company Johnson Incorporated Smith, LLC Irwin Corporation 6% 12% 9% Each bond has 10 years until maturity and the same level of risk. Their yield to maturity (TM) is 9%. Interest rates are assumed to remain constant over the next 10 years. BOND VALUE ISI 1200 1100 1 B YEARS TO...
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...
JUST NEED THE BLANK WORDED QUESTION ANS.
NOT MULTIPLE CHOICE
1st blank options = decrease, increase
2nd blank options = less, more
5. Risks of investing in bonds A security with higher risk will have a higher expected return. A bond's risk level is reflected in its yield, but understanding the different risks involved when investing in bonds is important. The curves on the following graph show the prices of two 10% annual coupon bonds at various interest rates." BOND...
The prices of low-coupon bonds tend to be less sensitive to a given change in interest rates than high coupon bonds, other things held constant. O O True False There is an inverse relationship between bonds' quality ratings and their required rates of return. Thus, the required return is lowest for AAA-rated bonds, and required returns increase as the bond ratings get lower. O True or False What's TRUE regarding long-term and short-term bonds (assume they have the same par...
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...
7-3: Bond Valuation Bond valuation An Investor has two bonds in his portfolio that both have a face value of $1,000 and pay a 11% annual coupon. Bond L matures in 14 years, while Bond S matures in 1 year Assume that only one more interest payment is to be made on Bond Sat its maturity and that 14 more payments are to be made on Bond L a. What will the value of the Bond L be if the...
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