Which of the following statements is false? When yield to maturity falls, bond prices fall. (Assuming...
Which of the following statements is false?
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When yield to maturity falls, bond prices fall. (Assuming everything else remains the same). |
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When a bond is downgraded, its yield to maturity falls. (Assuming everything else remains the same). |
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Callable bonds get called when interest rates fall. (Assuming everything else remains the same). |
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It is possible to lose money on a bond investment. |
Homework Answers
Option d is correct option. It is possible to lose money on a
bond investment . Based on bond rating some bonds are junk bonds
where entire amount could be lost.
Other options are incorrect because they are true options.
Add Answer to:
Which of the following statements is false?
When yield to maturity falls, bond prices fall. (Assuming...
For a discount bond, its coupon rate is_ than its yield to maturity and its price...
For a discount bond, its coupon rate is_ than its yield to maturity and its price is expected to __over the years. A B. C. D. Greater; increase Greater; decrease Lower; increase Lower; decrease A corporate bond has a 30-year maturity and pays interest annually. The quoted coupon rate is 10% and the bond is priced at par. The boond is callable in 5 years at 120% of par. What is the bonds yield to call? (Choose the closest one)...
The yield to maturity for 10-year bonds is as follows for four different bond rating categories:...
The yield to maturity for 10-year bonds is as follows for four different bond rating categories: Aaa 9.40% Aa2 10.00% Aa1 9.60% Aa3 10.60% The bonds of Falter Corporation were rated as Aaa and issued at par a few weeks ago. The bonds have just been downgraded to Aa2. Determine the new price of the bonds, assuming a 10-year maturity and semiannual interest payments. (Refer to “Semiannual Interest and Bond Prices” in Chapter 10 for a review if necessary.)
Which of the following statements is CORRECT? a. The market price of a bond will always...
Which of the following statements is CORRECT? a. The market price of a bond will always approach its par value as its maturity date approaches, provided the bond’s required return remains constant. b. If the Federal Reserve unexpectedly announces that it expects inflation to increase, then we would probably observe an immediate increase in bond prices. c. The total yield on a bond is derived from dividends plus changes in the price of the bond. d. Bonds are generally regarded...
20. In the bond market, the bond demanders are the and the bond suppliers are the...
20. In the bond market, the bond demanders are the and the bond suppliers are the A) lenders: borrowers B) lenders, advancers C) borrowers; lenders D) borrowers, advancers 21. The demand curve for bonds has the usual downward slope, indicating that at prices of the bond, everything else equal, the is higher. A) higher; demand B) higher, quantity demanded C) lower; demand D) lower; quantity demanded 22. Everything else held constant, if interest rates are expected to fall in the...
4. A bond trader purchased each of the following bonds at a yield to maturity of...
4. A bond trader purchased each of the following bonds at a yield to maturity of 11%. Immediately after she purchased the bonds, interest rates fell to 9%. What is the percentage change in the price of each bond after the decline in interest rates? Fill in the following table: Price @ 11%Price @ 9%Percentage Change 10-year, 10% annual coupon 10-year zero 5-year zero 30-year zero Perpetuity, $100 annual coupon 5. An investor has two bonds in his portfolio. Each...
just the answers please 4. In the market for money, when the Fed decreases the money...
just the answers please
4. In the market for money, when the Fed decreases the money stock, the money supply curve shifts to the and the interest rate , everything else held constant. A) right; rises B) right; falls C) left; falls D) left; rises Milton Friedman called the response of lower interest rates resulting from an increase in the money supply the effect A) liquidity B) price level C) expected-inflation D) income Questions based on "06 Financial Markets -...
Questions 1 to 10 are false statements. Please re-write each statement so that it is true....
Questions 1 to 10 are false statements. Please re-write each statement so that it is true. It may be as simple as one word change or more complex. 1. A callable bond is one in which the issuer is required to retire a certain amount of the outstanding bonds each year to ensure that all the bond principle is paid by final maturity. 2. There is no default risk with either Treasury bonds or municipal bonds. 3. The dirty price...
6. Bond yields and prices over time A bond Investor is analyzing the following annual coupon...
6. Bond yields and prices over time A bond Investor is analyzing the following annual coupon bonds: Annual Coupon Rate Issuing Company Irwin, LLC Johnson Corporation Smith Incorporated 12% 9% Each bond has 10 years until maturity and the same level of risk. Their yield to maturity (YTM) is 9%. Interest rates are assumed to remain constant over the next 10 years. BOND VALUE ISI 10 8 6 4 2 0 YEARS TO MATURITY Using the previous information, correctly match...
Question 21 2.5 pts Which of the following statements is false? corporations, unlike proprietorships and partnerships,...
Question 21 2.5 pts Which of the following statements is false? corporations, unlike proprietorships and partnerships, are subject to double taxation. bond prices will fall when lenders expect higher rates inflation in the future. the stock and bond markets are very efficient. In real life, when an individual expects the economy to expand, he should hold no nominal assets. Question 22 2.5 pts Which of the following statements is true? The relationship between risk and potential reward is inverse. Bond...
Use the following information for questions 6-11. A BB+ rated firm (0.8., a high yield or...
Use the following information for questions 6-11. A BB+ rated firm (0.8., a high yield or non-investment grade) has issued a callable bond with the following features: • Exactly 2 years to maturity • 9% annual coupon • $100 par value • The bond is callable in exactly one year for par value. 6. Relative to a non-callable bond with identical features, the price of the callable bond will be a. Lower, because the buyer of the bond is also...
For a discount bond, its coupon rate is_ than its yield to maturity and its price is expected to __over the years. A B. C. D. Greater; increase Greater; decrease Lower; increase Lower; decrease A corporate bond has a 30-year maturity and pays interest annually. The quoted coupon rate is 10% and the bond is priced at par. The boond is callable in 5 years at 120% of par. What is the bonds yield to call? (Choose the closest one)...
20. In the bond market, the bond demanders are the and the bond suppliers are the A) lenders: borrowers B) lenders, advancers C) borrowers; lenders D) borrowers, advancers 21. The demand curve for bonds has the usual downward slope, indicating that at prices of the bond, everything else equal, the is higher. A) higher; demand B) higher, quantity demanded C) lower; demand D) lower; quantity demanded 22. Everything else held constant, if interest rates are expected to fall in the...
just the answers please
4. In the market for money, when the Fed decreases the money stock, the money supply curve shifts to the and the interest rate , everything else held constant. A) right; rises B) right; falls C) left; falls D) left; rises Milton Friedman called the response of lower interest rates resulting from an increase in the money supply the effect A) liquidity B) price level C) expected-inflation D) income Questions based on "06 Financial Markets -...
6. Bond yields and prices over time A bond Investor is analyzing the following annual coupon bonds: Annual Coupon Rate Issuing Company Irwin, LLC Johnson Corporation Smith Incorporated 12% 9% Each bond has 10 years until maturity and the same level of risk. Their yield to maturity (YTM) is 9%. Interest rates are assumed to remain constant over the next 10 years. BOND VALUE ISI 10 8 6 4 2 0 YEARS TO MATURITY Using the previous information, correctly match...
Question 21 2.5 pts Which of the following statements is false? corporations, unlike proprietorships and partnerships, are subject to double taxation. bond prices will fall when lenders expect higher rates inflation in the future. the stock and bond markets are very efficient. In real life, when an individual expects the economy to expand, he should hold no nominal assets. Question 22 2.5 pts Which of the following statements is true? The relationship between risk and potential reward is inverse. Bond...
Use the following information for questions 6-11. A BB+ rated firm (0.8., a high yield or non-investment grade) has issued a callable bond with the following features: • Exactly 2 years to maturity • 9% annual coupon • $100 par value • The bond is callable in exactly one year for par value. 6. Relative to a non-callable bond with identical features, the price of the callable bond will be a. Lower, because the buyer of the bond is also...
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