Answered: a corportation that wants to pay off…

a corportation that wants to pay off its bond early typically has to pay one or more extra coupons as a prepayement penalty. what is this called?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 3Q: The rate of return on a bond held to its maturity date is called the bonds yield to maturity. If...

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a corportation that wants to pay off its bond early typically has to pay one or more extra coupons as a prepayement penalty. what is this called?

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A zero-coupon bond refers to a bond which: a. Does not pay any coupon payments because the issuer is in default b. Promises a single future payment c. Pays coupons only once a year d. Pays coupons only if the bond price is above face value
A zero-coupon bond refers to a bond which: Answer a. Does not pay any coupon payments because the issuer is in default b. Promises a single future payment c. Pays coupons only once a year d. Pays coupons only if the bond price is above face value
Consider the investors who purchase callable bonds. Usually, the investors will execute the call provision if interest rates rise so that they can get the face value amount back and reinvest it elsewhere at higher rates. True or False
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What are the characteristics of a zero-coupon bond, and why do investors purchase them when they provide nothing on a regular basis?
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