Homework Answers
Answer: The first option "more; lower" is correct
Bond prices are more sensitive to changes in yield when the bond is
selling at a lower initial yield to maturity
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Bond prices are sensitive to changes in yield when the bond is selling at a initial...
When comparing a highly liquid bond with a comparable but less liquid bond, the highly liquid...
When comparing a highly liquid bond with a comparable but less liquid bond, the highly liquid bind is more apt to have: a. a longer maturity b. a lower yield c. a shorter maturity d. a higher yield
If a bond is selling at a premium (i.e., at a price more than its face...
If a bond is selling at a premium (i.e., at a price more than its face value), which of the following is true? Interest rates must have gone up since the bond was issued. The coupon rate is higher than the yield to maturity. The bond must be a zero-coupon bond. The coupon rate is lower than the yield to maturity. The bond must have been issued by the U.S. Treasury.
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
Which of the following statements is false? When yield to maturity falls, bond prices fall. (Assuming...
Which of the following statements is false? When yield to maturity falls, bond prices fall. (Assuming everything else remains the same). When a bond is downgraded, its yield to maturity falls. (Assuming everything else remains the same). Callable bonds get called when interest rates fall. (Assuming everything else remains the same). It is possible to lose money on a bond investment.
Bond A has a 12-year maturity, a 5% semi-annual coupon, and a yield of 43%. Bond...
Bond A has a 12-year maturity, a 5% semi-annual coupon, and a yield of 43%. Bond B has a 12-year maturity a 3% coupon, and a yield of 4,3%. What must be true about the two bonds? A. Bond B has greater interest-rate risk OB. Bond A must be speculative grade since it has a higher coupon and the same yield O G. Bond B must be speculative grade since it has a lower coupon and the same yield O...
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...
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
The Fed controls interest rates to either tighten or loosen the economy. When the Feds are...
The Fed controls interest rates to either tighten or loosen the economy. When the Feds are needing to tighten the economy, they will raise the interest rates. When interest rates are changed, it sends a ripple effect through the entire financial market. When interest rates rise, cost of capital and borrowing increase. Consumers will borrow and spend less. This will lead to a slower economy and help to hedge inflation. However, the change in interest rates can affect the market...
22. You are considering a 9 percent coupon bond. When the yield to maturity (YTM) is...
22. You are considering a 9 percent coupon bond. When the yield to maturity (YTM) is 7.5 percent this bond has a price that is ________ than its face value. In other words, this bond is traded at a ________. 1) higher; premium 2) higher; discount 3) lower; premium 4) lower; discount
Question 26 A company with a higher contribution margin ratio is either more or less sensitive...
Question 26 A company with a higher contribution margin ratio is either more or less sensitive to changes in sales revenue, depending on other factors. more sensitive to changes in sales revenue likely to have a lower breakeven point. less sensitive to changes in sales revenue
Bond A has a 12-year maturity, a 5% semi-annual coupon, and a yield of 43%. Bond B has a 12-year maturity a 3% coupon, and a yield of 4,3%. What must be true about the two bonds? A. Bond B has greater interest-rate risk OB. Bond A must be speculative grade since it has a higher coupon and the same yield O G. Bond B must be speculative grade since it has a lower coupon and the same yield O...
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...
Question 26 A company with a higher contribution margin ratio is either more or less sensitive to changes in sales revenue, depending on other factors. more sensitive to changes in sales revenue likely to have a lower breakeven point. less sensitive to changes in sales revenue
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