Discuss the main types of bonds based on their coupons.

A bond’s expected return is sometimes estimated by its YTM and sometimes by its YTC. Underwhat conditions would the YTM provide a better estimate, and when would the YTC be better?

Solve this practice problem. Both pictures are the same problem

The process of bond valuation is based on the fundamental concept that the current price of a security can be determined by calculating the present value of the cash flows that the security will generate in the future. There is a consistent and predictable relationship between a bond’s coupon rate, its par value, a bondholder’s required return, and the bond’s resulting intrinsic value. Trading at a discount, trading at a premium, and trading at par refer to particular relationships between a bond’s intrinsic value and its par value. This also results from the relationship between a bond’s coupon rate and a bondholder’s required rate of return. (1) Remember, a bond’s coupon rate partially determines the interest-based return that a bond ________ pay, and a bondholder’s required return reflects the return that a bondholder (2) ___________to receive from a given investment. The mathematics of bond valuation imply a predictable relationship between the bond’s coupon rate, the bondholder’s…

Bond ratings predict the probability of default. Select one: True OR False

Check all that are true with respect to the yield to maturity (YTM) and the expected return for a bond. Group of answer choices The expected return is based on the contractly obligated payments whereas the YTM is based on what the investors expect to receive The YTM is based on the promised payments whereas the expected return is based on the expected cash flows Higher YTMs always mean higher expected returns In the presence of non-zero default risk, the YTM will be higher than the expected return YTM is just another name for the expected return

Bonds that have investment-grade ratings from sources such as S&P tend to have higher interest (coupon) rates due to higher default risk. True False

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Describe the relationship between coupon rate and required rate of return that will result in a bond selling at a discount, par value and a premium.

please explain whether it is true or false