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
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What is true regarding the value of a 5%-coupon bond with a FV
of $1,000 if...
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
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...
Bond Valuation A 20-year, 8% semiannual coupon bond with a par value of $1,000 sells for...
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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...
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Question 5: (15 points). (Bond valuation relationships) Arizona Public Utilities issued a bond that pays $70 in interest, with a $1,000 par value and matures in 25 years. The markers required yield to maturity on a comparable-risk bond is 8 percent. (Round to the nearest cent.) For questions with two answer options (e.g. increase/decrease) choose the best answer and write it in the answer block. a. What is the value of the bond if the markers required yield to maturity...
1a) You just learned from your sister that you can buy a $1,000 par value bond...
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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?
8. You buy a 12-year 10 percent annual coupon bond at par value, $1,000. You sell...
8. You buy a 12-year 10 percent annual coupon bond at par value, $1,000. You sell the bond three yean is your rate of return over this three-year period? A 40 percent B. 10 percent C. 20 percent D. 30 percent 11. Duration True or false? Explain. a. Longer-maturity bonds necessarily have longer durations. b. The longer a bond's duration, the lower its volatility. c. Other things equal, the lower the bond coupon, the higher its volatility. d. If interest...
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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...
Bond Valuation A 20-year, 8% semiannual coupon bond with a par value of $1,000 sells for $1,100. (Assume that the bond has just been issued.) Basic Input Data: Years to maturity: Periods per year. Periods to maturity: Coupon rate: Par value: Periodic payment: Current price 8% $1,000 $1,100 b. What would be the price of the bond if market interest rates change to: 12% 6% 10% Nominal market rate, r: Value of bond:
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A coupon bond which pays interest of $60 annually, has a par value of $1,000, matures in 5 years, and is selling today at a 584.52 discount from par value. The approximate yield to maturity on this bond is A6% B. 7% C. 8% D. 9% 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...
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