Homework Answers
Answer is Option 1 - The contract rate is above the market rate.
Generally, bonds are sold at a premium when the contract rate is higher the market rate because of high rate offered on bonds than the market rate. Hence, Option 1 is correct and all others are wrong.
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When a bond sells at a premium Multiple Choice The contract rate is above the market...
e carrying value of bonds at maturity always equals. Multiple Choice O the amount in excess...
e carrying value of bonds at maturity always equals. Multiple Choice O the amount in excess of par value. O the amount of cash originally received in exchange for the bonds. O the amount of discount or premium O the amount of cash originally received in exchange for the bonds plus any unamortized discount or less any premium. O the par value of the bond. < Prev 1 of 2 Next > Multiple Choice o The contract rate is above...
The duration of a coupon bond is: Multiple Choice Ο equal to its number of payments....
The duration of a coupon bond is: Multiple Choice Ο equal to its number of payments. Ο less than that of a zero coupon bond of equal maturity. less than that of a Ο equal to the zero coupon bond of the same maturity. Ο equal to its maturity. Ο increases as the time to maturity decreases. Assume a bond matures in 2 years, has a coupon rate of 6 percent, pays interest annually, and has a face value of...
When the market interest rate rises above the coupon rate for a particular quality of bond,...
When the market interest rate rises above the coupon rate for a particular quality of bond, the "current yield": will be below the coupon rate will be the same as the coupon rate will be above the coupon rate cannot be determined
Please determine the correct answers below. When a bond is sold at premium, issue price is...
Please determine the correct answers below. When a bond is sold at premium, issue price is Choose... . When a bond is sold at discount, issue price is Choose... . When a bond is sold at par, issue price is Choose... 0 Please determine the correct answers below. Effective interest rate (market rate) is equal to coupon rate when Choose... Effective interest rate (market rate) is greater than coupon rate when Choose... . Effective interest rate (market rate) is less...
If a entity sells bonds at a premium: The bonds' contract rate is less than the...
If a entity sells bonds at a premium: The bonds' contract rate is less than the market rate at issuance. The bonds' contract rate is the same as the markets at issuance. During the bonds' term, the market rate changes and is becomes lower than the bonds' contract rate. The bonds' contract rate is higher than the market rate at issuance. The bonds' contract rate is the same as the market rate at issuance. The bonds' contract rate is lower...
A bond with a face value of $1,000 that sells for $912.67 in the market is...
A bond with a face value of $1,000 that sells for $912.67 in the market is called a _____ bond. par value discount premium. zero coupon floating rate
2. A bond pays a coupon of $100. If the current market interest rate is 15%,...
2. A bond pays a coupon of $100. If the current market interest rate is 15%, then the bond will sell at a ... If the market interest rate is 9%, then the bond will sell at a A) discount; discount B) premium; premium - C) discount; premium D) premium; discount S T T L 11. 5 / 1.. ...
1. Bond A sells at a premium, so the YTM must be less than the coupon...
1. Bond A sells at a premium, so the YTM must be less than the coupon rate. Assume the required rate of return remains constant when we're trying to determine the likelihood of a call being made. If the YTM stays less than the 9% coupon rate, then 5 years from now when the call protection ends, the bond issuer will call the bond, pay the call premium, and refinance with new bonds at lower market rates. Thus, the market...
1 points Question 7 When the market interest rate is 7% and the coupon rate is...
1 points Question 7 When the market interest rate is 7% and the coupon rate is 10%, a bond sells at a discount. liquidation value. a premium. par. Cannot be determined without more information
7. Suppose a three year government bond is purchased at $1,000 when the market rate of...
7. Suppose a three year government bond is purchased at $1,000 when the market rate of interest is 10%, which pays a coupon rate of 10%. Determine the market value of the bond if the market rate of interest decreases to 8% right after the bond is issued. Comment on the relationship between the market rate of interest and the market value of bonds and who gains from the fall in the market interest rate of interest
e carrying value of bonds at maturity always equals. Multiple Choice O the amount in excess of par value. O the amount of cash originally received in exchange for the bonds. O the amount of discount or premium O the amount of cash originally received in exchange for the bonds plus any unamortized discount or less any premium. O the par value of the bond. < Prev 1 of 2 Next > Multiple Choice o The contract rate is above...
The duration of a coupon bond is: Multiple Choice Ο equal to its number of payments. Ο less than that of a zero coupon bond of equal maturity. less than that of a Ο equal to the zero coupon bond of the same maturity. Ο equal to its maturity. Ο increases as the time to maturity decreases. Assume a bond matures in 2 years, has a coupon rate of 6 percent, pays interest annually, and has a face value of...
Please determine the correct answers below. When a bond is sold at premium, issue price is Choose... . When a bond is sold at discount, issue price is Choose... . When a bond is sold at par, issue price is Choose... 0 Please determine the correct answers below. Effective interest rate (market rate) is equal to coupon rate when Choose... Effective interest rate (market rate) is greater than coupon rate when Choose... . Effective interest rate (market rate) is less...
2. A bond pays a coupon of $100. If the current market interest rate is 15%, then the bond will sell at a ... If the market interest rate is 9%, then the bond will sell at a A) discount; discount B) premium; premium - C) discount; premium D) premium; discount S T T L 11. 5 / 1.. ...
1. Bond A sells at a premium, so the YTM must be less than the coupon rate. Assume the required rate of return remains constant when we're trying to determine the likelihood of a call being made. If the YTM stays less than the 9% coupon rate, then 5 years from now when the call protection ends, the bond issuer will call the bond, pay the call premium, and refinance with new bonds at lower market rates. Thus, the market...
7. Suppose a three year government bond is purchased at $1,000 when the market rate of interest is 10%, which pays a coupon rate of 10%. Determine the market value of the bond if the market rate of interest decreases to 8% right after the bond is issued. Comment on the relationship between the market rate of interest and the market value of bonds and who gains from the fall in the market interest rate of interest
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