Homework Answers
3. The correct answer is (d)
In the market both yield and price can change. Yield is dependent on the market interest rate and price will change if the interest rate changes.
Coupon rate does not change normally and remain same throughout the maturity of the bond.
4.) The correct answer is (c)
Chapter 11 is filed for bankruptcy and it gives the time to reorganize itself and try to turnaround the operation.
5) The correct answer is (d)
Traders use company capital to earn profits in the market.
Investment bankers are usually involved in IPO, FPO and Merger and acquisition. They do not trade normally. Brokers are the one who provide capital and dealers act on behalf of their customers.
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3. Which of the following bond variables can change? a. Yield b. Coupon rate c. Price...
14. Which statement is true about bond dealers? (May be more than one) a. Bond dealers...
14. Which statement is true about bond dealers? (May be more than one) a. Bond dealers buy bonds at the ask price and sell them at the bid price b. Bond dealers buy bonds at the bid price and sell them at the ask price c. Bond dealers don't keep an inventory of bonds in their portfolio d. Bond dealers earn profits from the bid-ask spread e. Bond brokers who are not dealers earn profits earn profits from bid-ask spread...
2. A coupon bond pays annual int coupon rate of 10%, and has a yield to...
2. A coupon bond pays annual int coupon rate of 10%, and has a yield to maturity of annual interest, has a par value of $1.000, matures in 4 years, has a ed to maturity of 12%. The current yield on this bond is a. 10.52% b. 10.45% c. 10.95% d. 10.65% e. none of the above 3. A coupon bond that pays interest annually is selling op and has a coupon rate of 9%. The yield to maturity on...
1. A Treasury bond has a 10% annual coupon and a 10.5% yield to maturity. Which...
1. A Treasury bond has a 10% annual coupon and a 10.5% yield to maturity. Which of the following statements is CORRECT? * A. The bond sells at a price below par. B. The bond has a current yield less than 10%. C. The bond sells at a discount. D. A&C E. None of the above.
37. Consider a five-year bond with a 10% coupon that has a present yield to maturity...
37. Consider a five-year bond with a 10% coupon that has a present yield to maturity of 8%. If interest rates remain constant, one year from now the price of this bond will be: a) Par b) Higher c) Lower d) The same e) None of the above 38. ABC issued in 2018 a fifteen-year bond with coupon interest rate 4% and €1,000 face value. Today this bond is sold at €900. Which is the bond’s current yield? a) 0.062...
Which of the following is involved in direct finance? a. Securities dealers b. Investments banks c....
Which of the following is involved in direct finance? a. Securities dealers b. Investments banks c. Securities brokers d. All of the above
If the coupon rate on a bond is greater than the yield on the bond, then...
If the coupon rate on a bond is greater than the yield on the bond, then which of the following must be true? (select all that apply) a. The price of the bond exceeds the face value b. The bond is trading above par c. the bond is trading under par d. the face value exceeds the price of the bond
If the coupon rate on a bond is greater than the yield on the bond, then...
If the coupon rate on a bond is greater than the yield on the bond, then which of the following must be true? (SELECT ALL THAT APPLY) a) The face value exceeds the price of the bond b) The bond is trading above par c) The price of the bond exceeds the face value d) The bond is trading under par
+) Which of the following characteristic is NOT fixed on a coupon bond? A) Current yield...
+) Which of the following characteristic is NOT fixed on a coupon bond? A) Current yield B) Coupon rate C) Maturity D) Par amount
Which of the following are characteristics of a premium bond? I. coupon rate < yield-to-maturity II....
Which of the following are characteristics of a premium bond? I. coupon rate < yield-to-maturity II. coupon rate > yield-to-maturity III. market price > face value IV. market price < face value A. II and IV only B. I only C. I and III only D. II and III only
A 10-year bond that has a 12 percent coupon rate is currently selling for $1,000, which...
A 10-year bond that has a 12 percent coupon rate is currently selling for $1,000, which equals the bond's face value. If interest is paid semiannually, the bond's yield to maturity is (a) equal to 12%. (b) greater than 12%. (c) less than 12%. (d) More information is needed to answer this question. (e) None of the above is correct.
14. Which statement is true about bond dealers? (May be more than one) a. Bond dealers buy bonds at the ask price and sell them at the bid price b. Bond dealers buy bonds at the bid price and sell them at the ask price c. Bond dealers don't keep an inventory of bonds in their portfolio d. Bond dealers earn profits from the bid-ask spread e. Bond brokers who are not dealers earn profits earn profits from bid-ask spread...
2. A coupon bond pays annual int coupon rate of 10%, and has a yield to maturity of annual interest, has a par value of $1.000, matures in 4 years, has a ed to maturity of 12%. The current yield on this bond is a. 10.52% b. 10.45% c. 10.95% d. 10.65% e. none of the above 3. A coupon bond that pays interest annually is selling op and has a coupon rate of 9%. The yield to maturity on...
1. A Treasury bond has a 10% annual coupon and a 10.5% yield to maturity. Which of the following statements is CORRECT? * A. The bond sells at a price below par. B. The bond has a current yield less than 10%. C. The bond sells at a discount. D. A&C E. None of the above.
+) Which of the following characteristic is NOT fixed on a coupon bond? A) Current yield B) Coupon rate C) Maturity D) Par amount
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