ZuoTi.Pro
Question

A bond sold one month ago for $990. The bond is worth $930 in todays market. Assuming no changes in risk, which one of the f

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Assuming no change in the risk, higher the risk higher would be the return so it can be concluded that interest rate must be higher now than they were one month ago

0 0
Add a comment
Know the answer?
Add Answer to:
A bond sold one month ago for $990. The bond is worth $930 in today's market....
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • 1) You need to determine the market value of a $1,000 face value bond maturing in...

    1) You need to determine the market value of a $1,000 face value bond maturing in 5 years. The market yield (interest rate) for this type of bond is 3.1%. What is its market value? (Round to the nearest penny). 2) A year ago, you purchased a $1,000 face value bond for $1024. A year later you sold the bond for $1,007 after receiving a coupon payment of $55. What was your rate of capital gain? (Answer in tenth of...

  • 1) You need to determine the market value of a $1,000 face value bond maturing in...

    1) You need to determine the market value of a $1,000 face value bond maturing in 5 years. The market yield (interest rate) for this type of bond is 3.1%. What is its market value? (Round to the nearest penny). 2) A year ago, you purchased a $1,000 face value bond for $1024. A year later you sold the bond for $1,007 after receiving a coupon payment of $55. What was your rate of capital gain? (Answer in tenth of...

  • Question 1: A $1,010 face value bond is selling in the market place for $934. It...

    Question 1: A $1,010 face value bond is selling in the market place for $934. It matures in 3 years. If keep to maturity, what is the bond's yield to maturity? Question 2: A banker must earn at least a 2.7% return after expected inflation on short term loans. The inflation rate for the past 6 months has averaged 3.5%. The expected inflation rate for the next twelve months is 7.3%. Nominal interest rates for short term loans were 7.1%...

  • 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...

  • . Example: A bond was issued several years ago at par when the interest rate was...

    . Example: A bond was issued several years ago at par when the interest rate was 7 %, which was also its coupon rate (annual payment). Now, with three years left in t he bond's life, the interest rate is 8% per year. . What is the bond's price? . In another year, after the next coupon is paid and the remaining maturity falls to tw o years, how much would the bond be sold at? . What is the...

  • 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...

  • 4. The current yield on bond B, which has semiannual coupons, is 7.08% and the bond...

    4. The current yield on bond B, which has semiannual coupons, is 7.08% and the bond was sold at par (i.e., at a price of $1,000) three years ago, when the YTM on similar bonds was 8.0%. If there are 12 years until maturity, what would be the YTM to an investor who buys the bond today? (Hint: If the bond's price was $1,000 three years ago, when the market interest rate was 8.0%, what must be the coupon rate?...

  • 5. Eleven years from now the bond will have 1 year until maturity. Assume market interest...

    5. Eleven years from now the bond will have 1 year until maturity. Assume market interest rates are at 7 percent, the same place they were when the bond was issued. Given this: k. What will be the bond's price 11 years from now? 1. What will be the current yield eleven years from now? m. What is the expected capital gains yield eleven years from now? n. How does you answers to part (1) and (m) compare with your...

  • d. Assume that you have a one-year coupon bond with a face value of $1,000 and...

    d. Assume that you have a one-year coupon bond with a face value of $1,000 and a coupon payment of $50. What is the price of the bond if the yield to maturity is 6%? e. Assume that you have the same bond is in part d, except instead of paying one annual payment of $50, the bond pays two semi-annual payments of $25 (one six months from now and another payment in twelve months). What is the price of...

  • Question 27 1 pts A 12-year bond has an annual coupon of 9%. The coupon rate...

    Question 27 1 pts A 12-year bond has an annual coupon of 9%. The coupon rate will remain fixed until the bond matures. The bond has a yield to maturity of 7%. Which of the following statements is CORRECT? O If market interest rates decline, the price of the bond will O The bond is currently selling at a price below its par O If market interest rates remain unchanged, the bond's also decline. value. price one year from now...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT