Question

Which of the following cash flow streams represent bonds that are trading at par? (select all...

Which of the following cash flow streams represent bonds that are trading at par? (select all that apply)

a) (-50, 2, 2, 50)

b) (-100, 5, 5, 105)

c) (-10, 1, 1, 12)

d) (-20, 1, 1, 21)

9.

Which of the following must be true regarding the bond described by the cash flow stream (-100, 5, 105)? (select all that apply)

a) the bond is trading at par

b) it is equivalent to the bond (-50, 3, 53)

c) the coupon rate is 5%

d) the yield on the bond is 5%

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Answer #1

Q1:

option A:  (-50, 2, 2, 50)

---trading at par means current price of the bond is equal to par value ( here both are 50)

Q2:

option C: The coupon rate from the equation is given at 5%

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