Explain why the yield of a bond that trades at a discount exceeds the? bond's coupon...
Explain why the yield of a bond that trades at a discount exceeds the? bond's coupon rate. ?(Select the best choice? below.)
A. The bond can be purchased for a? discount, which gives it an? "extra return";? hence, the yield exceeds the coupon.
B. The? bond's coupon yield is irrelevant. It trades at a discount because investors avoid these bonds.
C. Because the value of the bond is? discounted, the return on the bond is reduced and the yield exceeds the coupon.
D. The bond is trading at a discount because investors? don't like the bond
Homework Answers
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Explain why the yield of a bond that trades at a discount
exceeds the? bond's coupon...
Explain why the yield of a bond that trades at a discount exceeds the bond's coupon rate.
Explain why the yield of a bond that trades at a discount exceeds the bond's coupon rate.
(Bond valuation) Doisneau 16-year bonds have an annual coupon interest of 8 percent, make interest payments...
(Bond valuation) Doisneau 16-year bonds have an annual coupon interest of 8 percent, make interest payments on a semiannual basis, and have a $1,000 par value. If the bonds are trading with a market's required yield to maturity of 14 percent, are these premium or discount bonds? Explain your answer. What is the price of the bonds? a. If the bonds are trading with a yield to maturity of 14%, then (Select the best choice below.) A. the bonds...
Please answer in electronic text. Thank you! 5. P You are looking at a Treasury bond that has a coupon of 4% and makes semiannual coupon payments. It matures in 10 years. a. What are the bond's c...
Please answer in electronic text. Thank you!
5. P You are looking at a Treasury bond that has a coupon of 4% and makes semiannual coupon payments. It matures in 10 years. a. What are the bond's cash flows? b. If the yield to maturity is 3.6% what is the interest rate per period? c. What is the present discounted value of the coupon payments? What is the present discounted value of the principal? What is the price of the...
If a bond's coupon rate is smaller than the yield to maturity, then a) Not enough...
If a bond's coupon rate is smaller than the yield to maturity, then a) Not enough information b) The face value payment must equal the initial purchase cost c) The face value payment must exceed the initial purchase cost d) The face value payment must fall short of the initial purchase cost Which of the following bonds is different than the others? a) (-90, 15, 15, 15, 105) b) (-18, 3, 3, 3, 21) c) (-45, 7.5, 7.5, 7.5, 50)...
9.Which of the following statements is FALSE? A. Most coupon bond issuers choose a coupon rate...
9.Which of the following statements is FALSE? A. Most coupon bond issuers choose a coupon rate so that the bonds will initially trade at, or very near to, par. B. If the bond trades at a discount, and investor who buys the bond will earn a return both from receiving the coupons and from receiving a face value that exceeds the price paid for the bond. C. At any point in time, changes in market interest rates affect a bond's...
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...
? Question 19 (Mandatory) (0.5 points) A bond's current yield is defined as: the bond's annual...
?
Question 19 (Mandatory) (0.5 points) A bond's current yield is defined as: the bond's annual coupon rate divided by the bond's current market price. O the bond's annual coupon rate divided by the bond's original issue price. O the bond's annual coupon rate divided by the market interest rate. O the bond's annual coupon rate divided by the bond's par value. Question 20 (Mandatory) (0.5 points) Which of the following is a reason municipal bonds offer lower rates of...
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....
Zero-coupon bonds: a. A ten-year, zero coupon bond trades at a Yield-to-Maturity (YTM) of 3.5%. Assume...
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coupon bond that has a culle coupon bond that he Which of the following statement is...
coupon bond that has a culle coupon bond that he Which of the following statement is correct for a 10 yield of 76? A) The bond's internal rate of return is 79 B) The bond's market value is higher than its face value C) The face value of the bond has decreased D) The bond's maturity value exceeds the bond's price. - interest will be earned in an account into which S1.000 is deposited for one year with continuous compounding...
Please answer in electronic text. Thank you!
5. P You are looking at a Treasury bond that has a coupon of 4% and makes semiannual coupon payments. It matures in 10 years. a. What are the bond's cash flows? b. If the yield to maturity is 3.6% what is the interest rate per period? c. What is the present discounted value of the coupon payments? What is the present discounted value of the principal? What is the price of the...
?
Question 19 (Mandatory) (0.5 points) A bond's current yield is defined as: the bond's annual coupon rate divided by the bond's current market price. O the bond's annual coupon rate divided by the bond's original issue price. O the bond's annual coupon rate divided by the market interest rate. O the bond's annual coupon rate divided by the bond's par value. Question 20 (Mandatory) (0.5 points) Which of the following is a reason municipal bonds offer lower rates of...
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coupon bond that has a culle coupon bond that he Which of the following statement is correct for a 10 yield of 76? A) The bond's internal rate of return is 79 B) The bond's market value is higher than its face value C) The face value of the bond has decreased D) The bond's maturity value exceeds the bond's price. - interest will be earned in an account into which S1.000 is deposited for one year with continuous compounding...
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