A bond has a $1,000 par value, makes annual coupon rate of 10%, has 5 years...
A bond has a $1,000 par value, makes annual coupon rate of 10%, has 5 years to maturity, cannot be called, and is not expected to default. The bond should sell at a premium if market interest rates are below 10% and at a discount if interest rates are greater than 10%.
True or False
Homework Answers
Answer True.
Bond should sell at a premium if market interest rates are less than Coupon rate and at a discount if interest rates are greater than coupon rate.
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A bond has a $1,000 par value, makes annual coupon rate of 10%,
has 5 years...
A bond has the following terms: 1) a $1,000 par value; 2) annual interest payments of...
A bond has the following terms: 1) a $1,000 par value; 2) annual interest payments of $100; 3) coupon rate of 10%; 4) 5 years to maturity; 5) cannot be called, and 6) is not expected to default. (T/F) The bond should sell at a premium if interest rates are below 10% and at a discount if interest rates are greater than 10%. True or False?
1a) You just learned from your sister that you can buy a $1,000 par value bond...
1a) You just learned from your sister that you can buy a $1,000 par value bond for $800. The coupon rate is ten percent (paid annually), and there are ten years left until the bond matures. You should purchase the bond if your require twelve percent return on bonds with this similar risk level. True/False? 1b) A corporate bond with ten years to maturity has an annual coupon rate of six percent. The bond today is selling for $1,000. With...
A $1,000 par bond with an 8% semi-annual coupon sells at a discount to par. What...
A $1,000 par bond with an 8% semi-annual coupon sells at a discount to par. What must be true about the bond? A. It is underpriced B. It is in default C. It has a yield to maturity greater than 8% D. None of the above
2. A bond matures in 7 years, has a par value of $1,000, and an annual...
2. A bond matures in 7 years, has a par value of $1,000, and an annual coupon payment of $70. Investors require a return of 8.5%. Calculate the price of the bond. [8 points] 3. A bond is priced at $1,280, has a par value of $1,000, 15 years to maturity, and a $135 annual coupon. The bond is callable in 5 years at $1,050. Calculate the yield to call. [8 points] 4. If 10-year Treasury bonds yield 6.2%, 10-year...
What is true regarding the value of a 5%-coupon bond with a FV of $1,000 if...
What is true regarding the value of a 5%-coupon bond with a FV of $1,000 if market rates decrease from 10% to 8%? A. Coupon rate is higher than the market risk B. Bond will sell at par C. Bond will sell at larger discount D. Bond will sell at a smaller discount E. Bond is close to its maturity
A company has an annual coupon bond issue that has a coupon rate of 7%, a...
A company has an annual coupon bond issue that has a coupon rate of 7%, a par value of $1,000, and a current price of $1,153.19. Determine the bond’s YTC if the bond is called back 4 years from now with a call premium of 10%. Group of answer choices 5% 10% 7% $1,100 A $1,000 par value bond has an 8% coupon rate (paid semiannually). It has 5 years remaining to maturity. If bond’s current price $1,085.30, what should...
You own a bond that has a 6% annual coupon rate and matures 5 years from...
You own a bond that has a 6% annual coupon rate and matures 5
years from now. You purchased this 10-year bond at par value when
it was originally issued. Which one of the following statements
applies to this bond if the relevant market interest rate is now
5.8% (yield to maturity)?
You purchase a bond with a coupon rate of 6.25% and a par value
of $1,000. There are 53 days to the next semiannual coupon payment
date and...
J&J Manufacturing issued a bond with a $1,000 par value. The bond has a coupon rate...
J&J Manufacturing issued a bond with a $1,000 par value. The bond has a coupon rate of 7% and makes payments semiannually. If the bond has 30 years remaining and the annual market interest rate is 9.4%, what will the bond sell for today?
A bond with an annual coupon of $100 originally sold at par for $1,000. The current...
A bond with an annual coupon of $100 originally sold at par for $1,000. The current yield to maturity on this bond is 9% Assuming no change in risk, this bond would sell at a order to compensate O A. discount; the issuer for the higher cost of borrowing OB. discount; the seller for the above market coupon rate O C. premium; the purchaser for the above market coupon rate OD. discount; the purchaser for the above market coupon rate...
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...
2. A bond matures in 7 years, has a par value of $1,000, and an annual coupon payment of $70. Investors require a return of 8.5%. Calculate the price of the bond. [8 points] 3. A bond is priced at $1,280, has a par value of $1,000, 15 years to maturity, and a $135 annual coupon. The bond is callable in 5 years at $1,050. Calculate the yield to call. [8 points] 4. If 10-year Treasury bonds yield 6.2%, 10-year...
You own a bond that has a 6% annual coupon rate and matures 5
years from now. You purchased this 10-year bond at par value when
it was originally issued. Which one of the following statements
applies to this bond if the relevant market interest rate is now
5.8% (yield to maturity)?
You purchase a bond with a coupon rate of 6.25% and a par value
of $1,000. There are 53 days to the next semiannual coupon payment
date and...
A bond with an annual coupon of $100 originally sold at par for $1,000. The current yield to maturity on this bond is 9% Assuming no change in risk, this bond would sell at a order to compensate O A. discount; the issuer for the higher cost of borrowing OB. discount; the seller for the above market coupon rate O C. premium; the purchaser for the above market coupon rate OD. discount; the purchaser for the above market coupon rate...
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...
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