Homework Answers
| The following relationship between yield to maturity and coupon rate applies to determine price of bond | ||||||||||||
| When coupon rate of bond is equal to yield to maturity, then bond price is at par (issued at par) | ||||||||||||
| When coupon rate of bond is higher than yield to maturity, then bond price is at premium (issued above par value) | ||||||||||||
| When coupon rate of bond is lower than yield to maturity, then bond price is at discount (issued at less than par value) | ||||||||||||
| When coupon rate of bond is lower than yield to maturity, the investors would want to compensate for lower coupon rate paid and thus the price of bond would be lower | ||||||||||||
| The price of bond gradually would increase to its par value as the maturity period reaches. | ||||||||||||
| Thus, this means the yield to maturity is higher than the coupon rate (when bond is issued at discount) | ||||||||||||
Add Answer to:
Please solve clearly and explain all steps
A discount bond sells for less than par. This...
All else constant, a bond will sell at _____ when the bond yield is _____ the...
All else constant, a bond will sell at _____ when the bond yield is _____ the coupon rate. A. at par; less than B. a premium; equal to C. a discount; lower than D. a premium; lower than E. at par; higher than
All else constant, a bond will sell at _____ when the coupon rate is _____ the...
All else constant, a bond will sell at _____ when the coupon rate is _____ the yield to maturity. a premium; less than a premium; equal to a discount; less than a discount; higher than par; less than
1. Bond A sells at a premium, so the YTM must be less than the coupon...
1. Bond A sells at a premium, so the YTM must be less than the coupon rate. Assume the required rate of return remains constant when we're trying to determine the likelihood of a call being made. If the YTM stays less than the 9% coupon rate, then 5 years from now when the call protection ends, the bond issuer will call the bond, pay the call premium, and refinance with new bonds at lower market rates. Thus, the market...
All else constant, a bond will sell at _____ when the yield to maturity is _____...
All else constant, a bond will sell at _____ when the yield to maturity is _____ the coupon rate. Multiple Choice a premium; equal to par; higher than par; less than a discount; higher than a premium; higher than
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...
Please solve clearly and explain all steps A 20-year, 8.80% coupon bond sells for $1209.99. If...
Please solve clearly and explain all steps
A 20-year, 8.80% coupon bond sells for $1209.99. If the coupon is paid semi-annually, what is the bond's YTM? The YTM is 8.80% The YTM is 9.62% The YTM is 6.86% The YTM is 2.96% The YTM is 3.83%
steps by steps please, by using the fourmal Study the following table and answer questions: c. Bond ABond B Par Value (R...
steps by steps please, by using the fourmal
Study the following table and answer questions: c. Bond ABond B Par Value (RM) 1,000 1,000 Coupon Rate(%) Maturity (years) 10 15 I 20 What would be the bond price if both bonds have a required rate of return of i) 8%? (6 marks) ii) Describe what it means if bond sells at a discount, a premium, and its face amount (par value). (5 marks)
Study the following table and answer questions:...
The par value of a bond is less than its current price. Which one of the...
The par value of a bond is less than its current price. Which
one of the following applies to this bond?
--the answer for #1 I got was $44.21 decrease & it was
incorrect.
The par value of a bond is less than its current price. Which
one of the following applies to this bond?
--- I put yeild to maturity is greater than the coupon rate
& that was incorrect
Question 1 6 pts A 4.25% coupon rate bond...
Please solve clearly and explain all steps A man buys a 22-year, 496 coupon bond with...
Please solve clearly and explain all steps
A man buys a 22-year, 496 coupon bond with annual coupon payments and a YTM of 7.5% at issuance. Four vears later, he decides to sell the bond when the YTM rate drops to 5.5%. For what prices does he first buy the bond, and then sell it? He buys for $924.67 and sells for $982.05 He buys for $831.31 and sells for $628.40 He buys for $924.67 and sells for $628.40 He...
Please solve clearly and explain all steps A 14-year zero annual coupon bond with a YTM...
Please solve clearly and explain all steps
A 14-year zero annual coupon bond with a YTM of 2.47% sells at what price? The price is $710.63 The price is $792.61 The price is $1,038.54 The price is $793 The price is $924.24
1. Bond A sells at a premium, so the YTM must be less than the coupon rate. Assume the required rate of return remains constant when we're trying to determine the likelihood of a call being made. If the YTM stays less than the 9% coupon rate, then 5 years from now when the call protection ends, the bond issuer will call the bond, pay the call premium, and refinance with new bonds at lower market rates. Thus, the market...
Please solve clearly and explain all steps
A 20-year, 8.80% coupon bond sells for $1209.99. If the coupon is paid semi-annually, what is the bond's YTM? The YTM is 8.80% The YTM is 9.62% The YTM is 6.86% The YTM is 2.96% The YTM is 3.83%
steps by steps please, by using the fourmal
Study the following table and answer questions: c. Bond ABond B Par Value (RM) 1,000 1,000 Coupon Rate(%) Maturity (years) 10 15 I 20 What would be the bond price if both bonds have a required rate of return of i) 8%? (6 marks) ii) Describe what it means if bond sells at a discount, a premium, and its face amount (par value). (5 marks)
Study the following table and answer questions:...
The par value of a bond is less than its current price. Which
one of the following applies to this bond?
--the answer for #1 I got was $44.21 decrease & it was
incorrect.
The par value of a bond is less than its current price. Which
one of the following applies to this bond?
--- I put yeild to maturity is greater than the coupon rate
& that was incorrect
Question 1 6 pts A 4.25% coupon rate bond...
Please solve clearly and explain all steps
A man buys a 22-year, 496 coupon bond with annual coupon payments and a YTM of 7.5% at issuance. Four vears later, he decides to sell the bond when the YTM rate drops to 5.5%. For what prices does he first buy the bond, and then sell it? He buys for $924.67 and sells for $982.05 He buys for $831.31 and sells for $628.40 He buys for $924.67 and sells for $628.40 He...
Please solve clearly and explain all steps
A 14-year zero annual coupon bond with a YTM of 2.47% sells at what price? The price is $710.63 The price is $792.61 The price is $1,038.54 The price is $793 The price is $924.24
Most questions answered within 3 hours.
-
The emergency room at Hospital Systems, Inc (HIS) serves
patients who arrive according to
a Poisson...
asked 3 minutes ago -
The chickens at Colonel Thompson's Ranch have a mean weight of
1850 g, with a standard...
asked 16 minutes ago -
The time married men with children spend on child care averages
5.9 hours per week (Time,...
asked 21 minutes ago -
There are many minerals which contain sliver. One of them,
smithite, is placed in water and...
asked 19 minutes ago -
22.3 g of fructose, C6H12O6,
are dissolved completely in 75.5 mL of pure water at 20.0...
asked 42 minutes ago -
Two bankrobbers are standing side by side, trying to push open
the door of a safe...
asked 43 minutes ago -
2. You want to buy a house. You can make an initial payment of
$200,000 and...
asked 40 minutes ago -
Why study the ‘Economic environment’ of a country? Describe the
information you will be collecting in...
asked 31 minutes ago -
A chandelier with mass m is suspended from a cable with mass M
from the ceiling....
asked 40 minutes ago -
How many disk accesses are needed to bring byte i of a file
into memory when...
asked 44 minutes ago -
Compare/Contrast the Lac and Ara operons.
asked 1 hour ago -
Part A
What is the maximum speed with which a 1200-kg car can round a
turn...
asked 1 hour ago