The value of a financial security that is selling at a discount to par will ____________...
The value of a financial security that is selling at a discount to par will ____________ as the security approaches maturity, all else equal.
-increase
-decrease
-stay the same
-increase then decrease
Homework Answers
Selling at a discount to par means currently selling the security at discounted price which is less than par value and at maturity it will be redeemed at par value.
Discounted price will continue increase this is because as maturity period will reduces than difference in par value value and market price will become less.
Price will continue increase because time value of money or interest accrued on market price of the bonds.
So Answer = Option 1 = Increase
Add Answer to:
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--the answer for #1 I got was $44.21 decrease & it was
incorrect.
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one of the following applies to this bond?
--- I put yeild to maturity is greater than the coupon rate
& that was incorrect
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--the answer for #1 I got was $44.21 decrease & it was
incorrect.
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--- I put yeild to maturity is greater than the coupon rate
& that was incorrect
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