Q: When a bond sells at a premium: O The contract rate is above the market rate O The contract rate is…
A: Premium is added to the market rate to make it to the contract rate. Premium increases the price of…
Q: Which one of the following statements is true?
A: Bond: A bond represents a debt instrument issued to a debt holder by the company. The debt holder…
Q: The coupon rate is calculated on the bond's face value for par value). not on the issue price or…
A: Coupon rate is the interest rate for periodic interest payments on the bond. Value of the bond =…
Q: a. Explain the difference between a bond’s coupon,and itsyield to maturity.b. Describe a…
A: Bonds are the debt security which is offered or issued by the corporates or the governments to…
Q: If the yield of maturity of the bond is equal the coupon rate, the price of this bond will be? a.…
A: Bond value is the current worth of a bond on the basis of the present value of all the cash flows a…
Q: the par va When the is higher than the coupon rate, the bond sells at a O a. time to maturity;…
A: Price of depends on coupon rate and YEILD to MATURITY.If they are equal than bond trade at par value…
Q: hich one of the following attributes is favorable for the convertible bond arbitrage? low…
A: The bonds can be converted into number of shares on expiration of bond due to which bonds have good…
Q: if a coupon bond are selling at a discount then?
A: Solution: If a coupon bond are selling at a discount then it means market interest rate of similar…
Q: A bond will sell at ____________ if the required return is greater than the coupon rate. Select…
A: Required return relation with price and coupon rate If required return is greater than coupon rate…
Q: The dollar interest received divided by the market price of the bond is called the Group of answer…
A: current yield formula: current yield =dividendmarket price
Q: when the bond price is above par or at a premium?
A: Coupon: Coupon is the annual or semiannual payment will be made by the issuer of the bond to its…
Q: f the current yield of a bond goes down from 6.9% to 4.8%, by what percent does the market price…
A: In terms of finance, current yield can be defined as the return on the bond investment. The formula…
Q: Two bonds have same time to maturity and coupon rates. One is callable at 102 and the other is…
A: Bond price is the present value of the all future cash flows from the bond.
Q: A bond will be priced at a discount to par value if its coupon rate is less than its…
A: Bond prices have an inverse relationship with interest rates, with the price of the current bond…
Q: The formula for the yield to maturity, i, on a discount bond is (Points : 1)i = (Face value –…
A: i= (Face Value-Discount price)/ Discount price or i = (Face value− Price)/Price
Q: The yield to maturity on a bond with a price equal to its par value will Select one: a. Will…
A: 1. Coupon Rate - Coupon Rate is the rate at which bonds are issued to the public. It is the interest…
Q: All else being constant, a bond will sell at __________ when the coupon rate is __________ the yield…
A: Bonds refer to investment securities in which money is to be lent to the company by an investor…
Q: The following statements describe the general characteristics of price of the coupon bond. Which one…
A: The price of bond = sum of the present value of coupons + present value of face value when the…
Q: All else constant, a bond will sell at when the coupon rate is maturity. Group of answer choices a…
A: Bond is referred to as an instrument of the indebtedness regarding an issuer of their bond to their…
Q: Which of the following is correct? Group of answer choices 1. The lower the price you pay for a…
A: An overpriced bond is one whose price is more than its value. Therefore, 2nd option is incorrect.…
Q: Which one of the following statements is true regarding bond valuation? a. When yield to maturity is…
A: Solution:- Bond value means the value at which the bond trades currently trades in the market. It…
Q: The formula (Coupon Payment / Current bond price) calculates the _______. Multiple Choice
A: Following are the definitions: Current Yield = It is the annualized income (either in interest or…
Q: lue. If the bonds are trading with a market's required yield to maturity of 18 percent, are these…
A: Price of bond is the present value of coupon payments and present value of par value of bond taken…
Q: If the bondholder’s required rate of return equals the coupon interest rate, the bond will sell at…
A: Bonds are instrument issued by company acknowledging the debt raised by company . It is a liability…
Q: A zero coupon bond pays ____ to the bondholder. Group of answer choices zero coupon and zero…
A: Zero coupon bonds are sold at the deep discount to the bond holders and they will not pay any…
Q: hich of the following will yield to lower coupon rates? A bond has a call option A bond…
A: Option 1: A bond that is callable will yield higher coupon rates as this bond gives the extra…
Q: If a company's bonds are selling at a discount, then Select one: a. The current interest rates…
A: If a company sell bond at a discount then it means that the going interest rate is more than the…
Q: For a discount bond, the current yield isthe yield to maturity, and the coupon rate is the yield to…
A: Discount bond is a bond that is issued for less than its par value or face value. Discount bonds…
Q: the yeild to maturity on a bond with a price equalto its par value will?
A: Solution: The yield to maturity on a bond with a price equal to its par value will equal to its…
Q: o coupon bond has more interest rate risk than a comparable coupon bond. true or false
A: Zero coupon bond do not have any coupon payment and face value is paid on the maturity and in coupon…
Q: What are the circumstances in which one may buy a bond certificate at a price that is higher or…
A: Bonds are issued by a company to raise finance.
Q: Which of the following situations would require an increase in the coupon rate for a bond selling at…
A: Bond can be sold at par, premium or discount
Q: The theoretical floor value for a convertible bond is its A. pure bond value. B. onversion price.…
A: Raising funds by issue of funds is one of the source used by the company in order to meet their…
Q: Prepare a duration table for a zero-coupon bond using the following assumptions:
A: Duration is the period required for the collecting amount from the investment in a bond. Par value =…
Q: Which of the following statements is CORRECT? a. A bond is likely to be called if it sells at a…
A: Bonds are the secured instruments which generate fixed income for the investors in the form of…
Q: a. Calculate the yield to maturity (YTM) for the bond. b. What relationship exists between the…
A: Yield To Maturity: It refers to the total rate earned by the bondholder for holding the bond till…
Q: A bond’s coupon rate is more than the interest rate, therefore the bond is selling at a
A: BOND COUPON RATE- Coupon rate is that the rate of interest paid by bond issuers on the bond's…
Q: Which one of the following attributes is favorable for the convertible bond arbitrage?
A: Convertible bond arbitrage refers to the trading strategy that intends to exploit the differences in…
Q: one property of an optionless bond is that for a given change in basis point , the percentage price…
A: The curving line depicts the price-yield relationship of an investment. As yields rise, a security's…
Q: How does the price-yield relationship for a callable bond compare to the same relationship for an…
A: The price yield relationship for a callable bond is negative convexity and it is positive convexity…
Q: Yield to maturity The relationship between a bond's yield to maturity and coupon interest rate…
A: Yield to maturity is return on the bond if held till maturity
Q: If a P1,000 bond sells for P1,125, which of the following statements are correct? I. The market rate…
A: given, market price = p1125 par= p1000
Q: A bond has a market price that exceeds its face value. Which one of these features currently applies…
A: The price of the bond is dependent upon the face value, coupon rate, yield to maturity and duration…
Q: 1. (T/F) A putable bond will have a higher coupon than a bond without a put option, assuming both…
A: Putable bonds are the ones that provide its holders the rights, but not the obligation, to redeem…
Q: The market value of a bond will be less than the par value if the market's required yield to…
A: The market price of a bond is the present value of all the future cash inflows.
- Explain briefly whether a zero-coupon bond will be selling (i) at a premium, and (ii) at par.
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- All else equal, a bond would be sold at __________ if its coupon rate is _________ its yield to maturity. a. premium, lower than b. par, equal to c. discount, greater than d. discount, equal toA bond will sell at ____________ if the required return is greater than the coupon rate. Select one: a. A discount b. Liquidation value c. Par d. A premiumWhich one of the following statements is true? Multiple Choice A premium bond has a current yield that exceeds the bond's coupon rate. The current yield on a par value bond will exceed the bond's yield to maturity. A discount bond has a coupon rate that is less than the bond's yield to maturity. The current yield on a premium bond is equal to the bond's coupon rate. The yield to maturity on a premium bond exceeds the bond's coupon rate.
- What will be the price of a bond in which the YTM is higher than the coupon rate? a. Below face value b. At face value c. Above face value d. Cannot be determinedState whether the following statement is True or False and explain why. “A bond’s price is higher when its fixed rate of coupon is higher.”If a coupon-paying bond is selling at a discount, the bond's yield to maturity will be _______ than the bond's coupon interest rate. less equal more
- a) All things being equal If a bond's coupon rate is higher than its yieldto maturity (YTM), is the bond selling at a discount, premium or par?b) All things being equal If a bond's coupon rate is lower than its yield tomaturity (YTM), is the bond selling at a discount, premium or par?c) All things being equal If a bond's coupon rate is equal to its yield tomaturity (YTM), then is the bond selling at a discount, premium or par?d) All else being equal, the longer the term to maturity, the greater orthe lower the duration?f) All else being equal, the higher the coupon rate on the bond, theshorter or the longer the duration of the bond?A bond will be priced at a discount to par value if its coupon rate is less than its yield-to-maturity (YTM). Select one: True Falsea. Explain the difference between a bond’s coupon,and itsyield to maturity.b. Describe a zero-couponbond
- All else constant, a bond will sell at _____ when the coupon rate is _____ the yield to maturity. A. a discount; less than B. a discount; higher than C. a premium; equal to D. a premium; less thanA bond has a market price that exceeds its face value. Which one of these features currently applies to this bond? Group of answer choices Yield to maturity greater than coupon rate. Currently selling at par. Yield to maturity less than the coupon rate. Yield to maturity equal to the coupon. Discount bond.how will the modified duretion of a floating coupon bond be compared to the modified duration of a fixed rate coupon bond? (same, higher or lower?) (floating coupon adjust coupon accotding to interest rate level, ie higher interest rate results in higher coupon payment)