9.Which of the following statements is FALSE? A. Most coupon bond issuers choose a coupon rate...
9.Which of the following statements is FALSE? A. Most coupon bond issuers choose a coupon rate so that the bonds will initially trade at, or very near to, par. B. If the bond trades at a discount, and investor who buys the bond will earn a return both from receiving the coupons and from receiving a face value that exceeds the price paid for the bond. C. At any point in time, changes in market interest rates affect a bond's yield to maturity and its price. D. Coupon bonds always trade for a discount.
Homework Answers
Option D is the option which is false.
Coupon bonds always trade for a discount.
Explanation:
If the coupon rate of bond is greater than the market rate then bond will trade premium to par.
Add Answer to:
9.Which of the following statements is FALSE? A. Most coupon
bond issuers choose a coupon rate...
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...
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...
11) When discussing bonds, convexity relates to the ________. A. shape of the bond price curve...
11) When discussing bonds, convexity relates to the ________. A. shape of the bond price curve B. shape of the yield curve C. slope of the yield curve D. shape of the bond dealer 12) A zero-coupon bond has a yield to maturity of 5% and a par value of $1,000. If the bond matures in 16 years, it should sell for a price of __________ today. A. $458.00 B. $641.00 C. $789.00 D. $1,100.00 13) The yield-to-maturity (YTM) on...
Explain why the yield of a bond that trades at a discount exceeds the? bond's coupon...
Explain why the yield of a bond that trades at a discount exceeds the? bond's coupon rate. ?(Select the best choice? below.) A. The bond can be purchased for a? discount, which gives it an? "extra return";? hence, the yield exceeds the coupon. B. The? bond's coupon yield is irrelevant. It trades at a discount because investors avoid these bonds. C. Because the value of the bond is? discounted, the return on the bond is reduced and the yield exceeds...
•Consider three 30-year bonds with annual coupon payments. One bond has a 10% coupon rate, one...
•Consider three 30-year bonds with annual coupon payments. One bond has a 10% coupon rate, one has a 5% coupon rate, and one has a 3% coupon rate. If the yield to maturity of each bond is 5%, what is the price of each bond per $100 face value? Which bond trades at a premium, which trades at a discount, and which trades at par?
5. An investor who owns a bond with a 9% coupon rate that pays interest semiannually...
5. An investor who owns a bond with a 9% coupon rate that pays interest semiannually and matures in three years is considering its sale. If the yield-to-maturity on the bond is 11%, find the price of the bond per 100 of par value. 6. A bond offers an annual coupon rate of 5%, with interest paid semiannually. The bond matures in seven years. At a market discount rate of 3%, find the price of this bond per 100 of...
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?...
Suppose a seven-year, $1,000 bond with a 11.94 % coupon rate and semiannual coupons is trading...
Suppose a seven-year, $1,000 bond with a 11.94 % coupon rate and semiannual coupons is trading with a yield to maturity of 9.79 %. a. Is this bond currently trading at a discount, at par, or at a premuim? Explain. b. If the yield to maturity of the bond rises to 10.26 % (APR with semiannual compounding), at what price will the bond trade? a. Is this bond currently trading at a discount, at par, or at a premuim? Explain....
1. The following table summarizes prices of various default-free, zero-coupon bonds (expressed as a percentage of...
1. The following table summarizes prices of various default-free, zero-coupon bonds (expressed as a percentage of face value): Maturity (years) Price (per $100 face value) $95.51 9105 $86.38 $81.65 $76.51 (a) Compute the yield to maturity for each bond. (b) Plot the zero-coupon yield curve (for the first five years). (c) Is the yield curve upward sloping, downward sloping, or flat? 2. Suppose a seven-year, $1000 bond with an 8% coupon rate and semiannual coupons is trading with a yield...
Explain why the yield of a bond that trades at a discount exceeds the bond's coupon rate.
Explain why the yield of a bond that trades at a discount exceeds the bond's coupon rate.
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...
5. An investor who owns a bond with a 9% coupon rate that pays interest semiannually and matures in three years is considering its sale. If the yield-to-maturity on the bond is 11%, find the price of the bond per 100 of par value. 6. A bond offers an annual coupon rate of 5%, with interest paid semiannually. The bond matures in seven years. At a market discount rate of 3%, find the price of this bond per 100 of...
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?...
1. The following table summarizes prices of various default-free, zero-coupon bonds (expressed as a percentage of face value): Maturity (years) Price (per $100 face value) $95.51 9105 $86.38 $81.65 $76.51 (a) Compute the yield to maturity for each bond. (b) Plot the zero-coupon yield curve (for the first five years). (c) Is the yield curve upward sloping, downward sloping, or flat? 2. Suppose a seven-year, $1000 bond with an 8% coupon rate and semiannual coupons is trading with a yield...
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