When the degree of uncertainty about the economy increases, the spread in the promised yield-to-maturity between...
When the degree of uncertainty about the economy increases, the spread in the promised yield-to-maturity between high and low-rated bonds tends to (a) decrease. (b) increase or decrease depending on the coupon. (c) widen. (d) reverse the sign of the spread. (e) remain fixed.
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When the degree of uncertainty about the economy increases, the
spread in the promised yield-to-maturity between...
For a discount bond, its coupon rate is_ than its yield to maturity and its price...
For a discount bond, its coupon rate is_ than its yield to maturity and its price is expected to __over the years. A B. C. D. Greater; increase Greater; decrease Lower; increase Lower; decrease A corporate bond has a 30-year maturity and pays interest annually. The quoted coupon rate is 10% and the bond is priced at par. The boond is callable in 5 years at 120% of par. What is the bonds yield to call? (Choose the closest one)...
The following are correct descriptions about general characteristics of Bonds, EXCEPT: Question 3 options: Bonds in...
The following are correct descriptions about general characteristics of Bonds, EXCEPT: Question 3 options: Bonds in general generate a fixed coupon payment every period, until maturity expires. A bond that offers a fixed coupon payment in perpetuity is called a console. If the market interest rate increases, then the current price for bonds will increase. If the current price of a bond increases, its yield to maturity (YTM) will decrease.
Just the answer please 13. Bonds with relatively low risk of default are called securities and...
Just the answer please
13. Bonds with relatively low risk of default are called securities and have a rating of Baa (or BBB) and above; bonds with ratings below Baa (or BBB) have a higher default risk and are called A) investment grade; lower grade B) investment grade; junk bonds C) high quality; lower grade D) high quality; junk bonds 14. Junk bonds, bonds with a low bond rating, are also known as A) high-yield bonds. B) investment grade 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...
The Fed controls interest rates to either tighten or loosen the economy. When the Feds are...
The Fed controls interest rates to either tighten or loosen the economy. When the Feds are needing to tighten the economy, they will raise the interest rates. When interest rates are changed, it sends a ripple effect through the entire financial market. When interest rates rise, cost of capital and borrowing increase. Consumers will borrow and spend less. This will lead to a slower economy and help to hedge inflation. However, the change in interest rates can affect the market...
maturity. par waluo of$1,000 and a 9% oftbe boed increases from 9% to 1156, then. The...
maturity. par waluo of$1,000 and a 9% oftbe boed increases from 9% to 1156, then. The bons price will incrase by $e w ath a current ylicld larger thas wilarue by S62, with a current yield larger than 9% me w -ase by S62, with a curent yield lower than 9% The bond's price will increase D. The bond's price will decrease by S62, with a current yiekd lower 13) Which of the Sollowing statemests 5% coupon bond that has...
4.Which one of the following statements about the approach to bond pricing is NOT true? Select...
4.Which one of the following statements about the approach to bond pricing is NOT true? Select one: A. To calculate a bond's price, one needs to calculate the present value of the bond's expected cash flows. B. The value, or price, of any asset is the future value of its cash flows. 6.Which one of the following statements is NOT true? Select one: A. The yield to maturity of a bond is the discount rate that makes the present value...
of a closed economy. when 6. According to the classical long-run macroeconomic model of a co...
of a closed economy. when 6. According to the classical long-run macroeconomic model of a co decrease and government spending is unchanged a consumption and investment both increase b. consumption and investment both decrease c consumption increases and investment decreases d. consumption decreases and investment increases. 7. Suppose a business-friendly billionaire becomes president. As a result, businesses become optimistic about the future and more eager than before to increase their investment spending According to the classical long-run macroeconomic model of...
Bonds and their valuation
Consider the following case of investment-grade bonds issued by Procter & Gamble Co. (P&G) in August 2011.Proctor & Gamble (NYSE: PG) | Issue DetailsIssue Size ($Mil.)Maturity DateCallable$1,00008/15/2014YesCouponCoupon TypeCoupon Frequency0.700%FixedSemi-annuallyProctor and Gamble’s total amount of debt increased from 31.9% in March 2011 to 34.2% in December 2011, mainly due to its net debt issuances to fund general corporate purposes.What was the annual cost of the funds raised from the $1.0 billion bonds that mature in 2014 to P&G?basis points.If the bond sold at...
11) Which of the following typically has the lowest yield? A) 5-year AAA corporate bond B)...
11) Which of the following typically has the lowest yield? A) 5-year AAA corporate bond B) 2-year U.S. Treasury note C) Fed Funds D) 3-month U.S. Treasury bill 12) Debt instruments are also called: A) adjustable notes B) credit instruments C) perpetual securities D) interest rate swaps 13) Which of the following characteristic is NOT fixed on a coupon bond? A) Current yield B) Coupon rate C) Maturity D) Par amount 14) If you purchased a U.S. Treasury at a...
For a discount bond, its coupon rate is_ than its yield to maturity and its price is expected to __over the years. A B. C. D. Greater; increase Greater; decrease Lower; increase Lower; decrease A corporate bond has a 30-year maturity and pays interest annually. The quoted coupon rate is 10% and the bond is priced at par. The boond is callable in 5 years at 120% of par. What is the bonds yield to call? (Choose the closest one)...
Just the answer please
13. Bonds with relatively low risk of default are called securities and have a rating of Baa (or BBB) and above; bonds with ratings below Baa (or BBB) have a higher default risk and are called A) investment grade; lower grade B) investment grade; junk bonds C) high quality; lower grade D) high quality; junk bonds 14. Junk bonds, bonds with a low bond rating, are also known as A) high-yield bonds. B) investment grade bonds....
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...
maturity. par waluo of$1,000 and a 9% oftbe boed increases from 9% to 1156, then. The bons price will incrase by $e w ath a current ylicld larger thas wilarue by S62, with a current yield larger than 9% me w -ase by S62, with a curent yield lower than 9% The bond's price will increase D. The bond's price will decrease by S62, with a current yiekd lower 13) Which of the Sollowing statemests 5% coupon bond that has...
of a closed economy. when 6. According to the classical long-run macroeconomic model of a co decrease and government spending is unchanged a consumption and investment both increase b. consumption and investment both decrease c consumption increases and investment decreases d. consumption decreases and investment increases. 7. Suppose a business-friendly billionaire becomes president. As a result, businesses become optimistic about the future and more eager than before to increase their investment spending According to the classical long-run macroeconomic model of...
Consider the following case of investment-grade bonds issued by Procter & Gamble Co. (P&G) in August 2011.Proctor & Gamble (NYSE: PG) | Issue DetailsIssue Size ($Mil.)Maturity DateCallable$1,00008/15/2014YesCouponCoupon TypeCoupon Frequency0.700%FixedSemi-annuallyProctor and Gamble’s total amount of debt increased from 31.9% in March 2011 to 34.2% in December 2011, mainly due to its net debt issuances to fund general corporate purposes.What was the annual cost of the funds raised from the $1.0 billion bonds that mature in 2014 to P&G?basis points.If the bond sold at...
11) Which of the following typically has the lowest yield? A) 5-year AAA corporate bond B) 2-year U.S. Treasury note C) Fed Funds D) 3-month U.S. Treasury bill 12) Debt instruments are also called: A) adjustable notes B) credit instruments C) perpetual securities D) interest rate swaps 13) Which of the following characteristic is NOT fixed on a coupon bond? A) Current yield B) Coupon rate C) Maturity D) Par amount 14) If you purchased a U.S. Treasury at a...
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