Homework Answers
Answer : B) the market rate of interest
The discount rate is nothing but the current rate in the market.
The coupon rate is fixed by company. The coupon rate may be high or low than current rate.
If the coupon rate is higher than the current market rate (YTM), the bond will trade at a premium
otherwise will trade at discount.
The coupon rate is fixed for life time and it is determined by the issuing company.
But the current market rate is determined by market forces and that will the market value of bond.
In other words, discount rate is current market rate or YTM. (Thumbs up please)
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14) The discount rate used to value a bond is A) the coupon interest rate. C)...
Bond Bond Value Current Yield Bond A Bond B Bond C Discount Rate 5.00% 15.00% 15.60%...
Bond Bond Value Current Yield Bond A Bond B Bond C Discount Rate 5.00% 15.00% 15.60% Roen is planning to invest in five-year, 15% annual coupon bonds with a face value of $1,000 each. Complete the table by calculating the value of each bond and the current yields at the various discount rates. There is a distinct relationship between the coupon rate, the discount rate, and a bond's price relative to its par value. Based on your preceding calculations, complete...
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.. ...
A discount bond will have a negative nominal interest rate when the: A. bond is sold...
A discount bond will have a negative nominal interest rate when the: A. bond is sold long before its maturity date. B. current bond price is greater than its face value. OC sum of the annual coupon payments and the face value of the bond is higher than its current price. O D current bond yield is smaller than its yield to maturity Which of the following statements is true? O A. Both a coupon bond and a perpetuity can...
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...
ield to maturity The Salem Company bond currently sells for $95544, has a coupon interest rate...
ield to maturity The Salem Company bond currently sells for $95544, has a coupon interest rate of 9% and a $1000 par value, pays interest annually, and as 18 years to maturity Calculate the yield to maturity (YTM) on this bond Explain the relationship that exists between the coupon interest rate and yield to maturity and the par value and market value of a bond. The yield to maturity on this bond is %. (Round to three decimal places.) ....
1. A bond with two years remaining until maturity offers a 3% coupon rate with interest...
1. A bond with two years remaining until maturity offers a 3% coupon rate with interest paid annually. At a market discount rate of 4%, find the price of this bond per 1000 of par value. 2. 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 1000 of par value. 3. A zero-coupon bond matures in...
2. A bond pays a coupon of $100. If the current market interest rate is 15%,...
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15. Zero coupon bonds are bonds that are issued: a) With a zero effective interest rate....
15. Zero coupon bonds are bonds that are issued: a) With a zero effective interest rate. b) At a rate that provides a large discount at issuance. c) At a rate that has zero difference between the coupon rate and the market rate of interest. d) As bonds that will have zero amortization recorded over the life of the bond.
Problem 14-14 Consider a bond with par value = $1,000) paying a coupon rate of 5%...
Problem 14-14 Consider a bond with par value = $1,000) paying a coupon rate of 5% per year semiannually when the market interest rate is only 4% per half-year. The bond has three years until maturity a. Find the bond's price today and six months from now after the next coupon is paid. (Round your answers to 2 decimal places.) Current price Price after six months b. What is the total (six-month) rate of return on the bond? (Do not...
Pleaae solve all 14. (I) A discount bond requires the borrower to repay the principal at...
Pleaae solve all
14. (I) A discount bond requires the borrower to repay the principal at the maturity date plus an interest payment. (II) A coupon bond pays the lender a fixed interest payment every year until the maturity date, when a specified final amount (face or par value) is repaid. A) (D) is true, (II) false. C) Both are true. B) (1) is false, (II) true. D) Both are false. 15. With an interest rate of 10 percent, the...
Bond Bond Value Current Yield Bond A Bond B Bond C Discount Rate 5.00% 15.00% 15.60% Roen is planning to invest in five-year, 15% annual coupon bonds with a face value of $1,000 each. Complete the table by calculating the value of each bond and the current yields at the various discount rates. There is a distinct relationship between the coupon rate, the discount rate, and a bond's price relative to its par value. Based on your preceding calculations, complete...
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.. ...
A discount bond will have a negative nominal interest rate when the: A. bond is sold long before its maturity date. B. current bond price is greater than its face value. OC sum of the annual coupon payments and the face value of the bond is higher than its current price. O D current bond yield is smaller than its yield to maturity Which of the following statements is true? O A. Both a coupon bond and a perpetuity can...
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...
ield to maturity The Salem Company bond currently sells for $95544, has a coupon interest rate of 9% and a $1000 par value, pays interest annually, and as 18 years to maturity Calculate the yield to maturity (YTM) on this bond Explain the relationship that exists between the coupon interest rate and yield to maturity and the par value and market value of a bond. The yield to maturity on this bond is %. (Round to three decimal places.) ....
2. A bond pays a coupon of $100. If the current market interest rate is 15%, then the bond will sell at a 2. If the market interest rate is 9%, then the bond will sell at a A) discount; discount B) premium; premium Cdiscount; premium D) premium; discount 3. Suppose the U.S. T-bill rate is 0.5%, the market risk premium is 1.3%, and the beta for Stock XYZ is 3.8. What is the "expected return" for Stock XYZ? A)...
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Pleaae solve all
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