Which statement about bond prices is most accurate? Select one: a. For a premium bond the...
Which statement about bond prices is most accurate?
Select one:
a. For a premium bond the yield to maturity is less than the coupon rate
b. With an interest rate increase the price rises more for long-term bonds than short-term bonds
c. With an interest rate decline the price rises more for short-term bonds than long-term bonds
d. For a discount bond the coupon rate is more than the yield-to-maturity
e. The answers included are not correct
Homework Answers
A is the correct answer because for a premium bond yield to maturity is less than coupon rate
Option B is wrong because with an interest rate increase the price do not rise because there is an inverse relationship between interest rate and the price
Option D is wrong because for a discount Bond coupon rate is less than yield to maturity
Add Answer to:
Which statement about bond prices is most accurate?
Select one:
a. For a premium bond the...
4.Which one of the following statements about the approach to bond pricing is NOT true? Select...
4.Which one of the following statements about the approach to bond pricing is NOT true? Select one: A. To calculate a bond's price, one needs to calculate the present value of the bond's expected cash flows. B. The value, or price, of any asset is the future value of its cash flows. 6.Which one of the following statements is NOT true? Select one: A. The yield to maturity of a bond is the discount rate that makes the present value...
. Assume that a 10-year Treasury bond has a 12% annual coupon, while a 15-year T-bond...
. Assume that a 10-year Treasury bond has a 12% annual coupon, while a 15-year T-bond has an 8% annual coupon. Assume also that the yield curve is flat, and all Treasury securities have a 10% yield to maturity. Which of the following statements is CORRECT? a. If interest rates decline, the prices of both bonds will increase, but the 10-year bond would have a larger percentage increase in price. b. If interest rates decline, the prices of both bonds...
when the coupon the All else constant, a bond will sell at yield to maturity a...
when the coupon the All else constant, a bond will sell at yield to maturity a premium; less than a premium; equal to a discount; less than D. a discount; higher than par; less than с. 4 The Walthers Company has a semi-annual coupon bond outstanding tanding. An increase in the market rate of interest will have which of the following effects which of the following effects on the bond? increase the coupon rate decrease the coupon rate increase the...
If a coupon bond has two years to maturity, a coupon rate of 10%, a par...
If a coupon bond has two years to maturity, a coupon rate of 10%, a par value of S900, and a yield to maturity of 14%, then the coupon bond will sell for $(Round your response to the nearest two decimal place The price of a bond and its yield to maturity are Which of the following statements is not true? O A. Current yield is a worse approximation of yield to maturity for long-term bonds when compared to short-term...
14.A company has 5-year bonds outstanding that pay an 7.5 percent coupon rate. Investors buying the...
14.A company has 5-year bonds outstanding that pay an 7.5 percent coupon rate. Investors buying the bond today can expect to earn a yield to maturity of 14.4 percent p.a.. What should the company's bonds be priced at today? Assume annual coupon payments and a face value of $1000. (Rounded to the nearest dollar) Select one: a. $765 b. $1279 c. $638 d. $1959 15.Jack is planning to buy a 9-year bond with semi-annual coupons and a coupon rate of...
Which of the following statement is not true about interest rate risk? (Only one correct answer.)...
Which of the following statement is not true about interest rate risk? (Only one correct answer.) Select one: a. Long term bonds have higher interest rate risk than short term bonds. ob. Interest rate risk is the uncertainty of how the bond price will change following the interest rate changes. c. Lower coupon bonds have lower interest rate risk. d. Bond prices are negatively related to interest rate movements.
Suppose a seven-year, $1,000 bond with a 11.94 % coupon rate and semiannual coupons is trading...
Suppose a seven-year, $1,000 bond with a 11.94 % coupon rate and semiannual coupons is trading with a yield to maturity of 9.79 %. a. Is this bond currently trading at a discount, at par, or at a premuim? Explain. b. If the yield to maturity of the bond rises to 10.26 % (APR with semiannual compounding), at what price will the bond trade? a. Is this bond currently trading at a discount, at par, or at a premuim? Explain....
If a coupon bond has two years to maturity, a coupon rate of 8%, a par...
If a coupon bond has two years to maturity, a coupon rate of 8%, a par value of $800, and a yield to maturity of 12%, then the coupon bond will sell for $ (Round your response to the nearest two decimal place) The price of a bond and its yield to maturity are Positively related, negitively related, or unrelated. which of the following statements is not true? A. The longer to maturity, the greater is the change in the...
chapter 3 QUESTIONS 1. Write down the formula that is used to calculate the yield to...
chapter 3
QUESTIONS 1. Write down the formula that is used to calculate the yield to maturity on a 20-year 10% coupon bond with $1,000 face value that sells for $2,000. 2. If there is a decline in interest rates, which would you rather be holding, long-term bonds or short-term bonds? Why? Which type of bond has the greater interest-rate risk? 3. A financial adviser has just given you the following advice: "Long-term bonds are a great investment because their...
1) The principal amount of a bond that is repaid at the end of the loan...
1) The principal amount of a bond that is repaid at the end of the loan term is called the bond's: A) coupon B) face value. C) maturity D) yield to maturity E) coupon rate. 2) A bond with a face value of $1,000 that sells for $1.000 in the market is called a bond A) par value B) discount C) premium D) zero coupon E) floating rate 3) A bond with a coupon rate of 6 percent that pays...
when the coupon the All else constant, a bond will sell at yield to maturity a premium; less than a premium; equal to a discount; less than D. a discount; higher than par; less than с. 4 The Walthers Company has a semi-annual coupon bond outstanding tanding. An increase in the market rate of interest will have which of the following effects which of the following effects on the bond? increase the coupon rate decrease the coupon rate increase the...
If a coupon bond has two years to maturity, a coupon rate of 10%, a par value of S900, and a yield to maturity of 14%, then the coupon bond will sell for $(Round your response to the nearest two decimal place The price of a bond and its yield to maturity are Which of the following statements is not true? O A. Current yield is a worse approximation of yield to maturity for long-term bonds when compared to short-term...
Which of the following statement is not true about interest rate risk? (Only one correct answer.) Select one: a. Long term bonds have higher interest rate risk than short term bonds. ob. Interest rate risk is the uncertainty of how the bond price will change following the interest rate changes. c. Lower coupon bonds have lower interest rate risk. d. Bond prices are negatively related to interest rate movements.
chapter 3
QUESTIONS 1. Write down the formula that is used to calculate the yield to maturity on a 20-year 10% coupon bond with $1,000 face value that sells for $2,000. 2. If there is a decline in interest rates, which would you rather be holding, long-term bonds or short-term bonds? Why? Which type of bond has the greater interest-rate risk? 3. A financial adviser has just given you the following advice: "Long-term bonds are a great investment because their...
1) The principal amount of a bond that is repaid at the end of the loan term is called the bond's: A) coupon B) face value. C) maturity D) yield to maturity E) coupon rate. 2) A bond with a face value of $1,000 that sells for $1.000 in the market is called a bond A) par value B) discount C) premium D) zero coupon E) floating rate 3) A bond with a coupon rate of 6 percent that pays...
Most questions answered within 3 hours.
-
First, describe policies promoted by governments of the
political right to address economic globalization. Second, describe...
asked 10 minutes ago -
M2-9 Completing T-Accounts LO2-4
Following are the transactions of Dennen, Inc., for the month of
January....
asked 10 minutes ago -
Write a program using python that reads from values from a text
file and plots them...
asked 12 minutes ago -
Look up the density of
the metal of the object used in parts A and B...
asked 11 minutes ago -
Discuss strategic considerations that Amazon and NYC politicians
had. Analyze why the deal between Amazon and...
asked 14 minutes ago -
A combustion reaction is describes as a carbon source reacting
with oxygen and producing carbon dioxide...
asked 29 minutes ago -
Buckminsterfullerence is a recently allotrope of carbon in which
carbon atoms form molecules of formula C_60,...
asked 31 minutes ago -
Lower Equitorial and Upper Equitorial are the same except Lower
Equitorial has a larger capital stock....
asked 36 minutes ago -
how do you think that pH of a jar where you have added a certain
amount...
asked 46 minutes ago -
If the Federal Reserve increases the reserve requirement, what
will happen to the Money Supply in...
asked 41 minutes ago -
Suppose that market demand for a good is given by Q = 9 - 0.3 P...
asked 48 minutes ago -
two thin lenses are separated by a distance x. The first lens
has a focal length...
asked 49 minutes ago