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: The higher the credit rating, the __________ the bond, the __________ the default probability, and…
A: Consequently, bonds with the highest quality credit ratings always carry the lowest yields; bonds…
Q: d. As interest rate increases the value of a bond will ______________. e. If the bondholder’s…
A: Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: A bondholder with a short-term bond is exposed to ___________ interest rate risk than when owing a…
A: A bond is a debt capital utilized by entities and governments to raise finance for their purposes.…
Q: Why does the yield on a discount bond surpass the coupon rate
A: Introduction:The bond will trade at a discount if the yield to maturity (YTM) exceeds the coupon…
Q: Explain why the dirty price of a bond might fall sharply before the next coupon is paid?
A: Dirty price of bond include clean price plus accrued interest.
Q: Describe in detail the key features of a bon value, maturity, coupon rate, coupon, yield maturity,…
A: Bonds are debt instruments that carry the interest payments to be paid each period and face value on…
Q: As market rates of interest rise, investors move their funds into bonds, thus increasing their price…
A: Market interest rates are based on the market conditions. It gets affected with the market inflation…
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: Since bonds always come with a coupon rate, why is it still important to check the yield to maturity…
A: Bonds pay periodic coupons which is calculated as a percentage of the face value of the bond. It is…
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: Do bondholders fare better when the yield to maturityincreases or when it decreases? Why?
A: When the yield to maturity increases, this represents a decrease in the price of the bond. Ifthe…
Q: e. If the bondholder’s required rate of return equals the coupon interest rate, the bond will sell…
A: If the bondholder’s required rate of return equals the coupon interest rate, the bondwill sell at…
Q: Which type of bond is likely to pay a coupon payment that is varying (i.e. it changes over time) ? O…
A: Bonds act as long-term debt for the issuer as the issuer is under the obligation to pay regular…
Q: All else held the same, an increase in time to maturity will cause an increase in the value of a…
A: Value of bond is usually sum of all present values in form of principle and interest payments…
Q: Bond Relationships. Select one or more of the following phrases to complete the following sentences.…
A: Since you posted a question with multiple subparts, we will solve the first three subparts for you.…
Q: What will be the price of a bond in which the YTM is higher than the coupon rate? a. Below face…
A: The bond value can be determined looking at the relationship of coupon rate and YTM. If the YTM of…
Q: Explain in detail, in terms of current yield, capital gain yields and YTM, why: a) If YTM = coupon…
A: Bonds are fixed-income securities that reflect loans from investors to borrowers (typically…
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: Bond Relationships. Select one or more of the following phrases to complete the following sentences.…
A: The bond relationship includes the terms used in the bond valuation. It includes the interest rate,…
Q: Does it make any difference if the coupon rate on a bond is more than the needed rate of return on…
A: Introduction: Bond prices are determined by the needed rate of return on the bond, and bond prices…
Q: a bonds interest rate risk is lower if the bond has a _____ maturity and a ____ coupon rate
A:
Q: f a bond’s coupon rate is greater than the investor’s required rate of return on the bond, would the…
A: Prices of bond depend on required rate of return on the bond and the prices of bond changes with…
Q: An option free bond’s value/price has an inverse relationship with interest rates/yield. If yields…
A: Bond valuation refers to a method which is used to compute the current value or present value (PV)…
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: A "discount" bond's price is less than it's par value because the coupon rate is less than the yield…
A: When there is a fall in the price of a bond it is said to be selling at a discount to par.A zero…
Q: Explain the difference between the coupon rate and the required return on a bond.
A: Coupon rate : Coupon rate is the rate that is paid periodically. The coupon rate is the amount of…
Q: You predict that interest rates are about to fall. Which bond will give you the highest capital…
A: Capital gain which means excess of or difference of market price of Bond over the initial value or…
Q: All else constant, a bond will sell at _____ when the coupon rate is _____ the yield to maturity.…
A: Bond Coupon rate and YTM rate determines whether it will sell at discount, premium or at par.
Q: Bond Relationships. Select one or more of the following phrases to complete the following sentences.…
A: Bond is a contract under which a borrower promises to pay interest and principal on a specific dates…
Q: Describe the differences between the yield to maturity (YTM) and the yield to call (YTC) on a bond.…
A: The differences between the yield to maturity and the yield to call on a bond are:
Q: What is a bond’s market value when the required rate of return (ie market rate) is less than the…
A: Bond: A bond is a kind of debt instrument shaped for the determination of raising capital. It is…
Q: If you pay a price to buy a bond that is below its value, you will get a return that is lower than…
A: The statement is false
Q: A bond is sold at OA) par; less than. OB) C) D) if the YTM (yield to maturity) is par; higher than.…
A: The bonds are the financial instruments of the business that are used to raise the money from the…
Q: For a conventional bond paying a fixed coupon rate, an INCREASE in the risk of default would lead…
A: Default risk: Default risk can be defined as the risk that the borrower of the money will not pay…
Q: Choose from liquidity premium, taxability premium, default risk premium, maturity premium.
A: Liquidity Premium: It represents the additional compensation paid for the investment that cannot be…
Q: The Macaulay duration is the weighted average number of coupon periods until a bond’s scheduled cash…
A: Macaulay Duration: It is used to calculate the duration of bonds, which is a measure of the…
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: Bond Relationships. Select one or more of the following phrases to complete the following sentences.…
A: Bonds are a form of debt of the company. When bonds are issued at a value less than its face value,…
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: Which type of bond is likely to pay a coupon payment that is varying (i.e. it changes over time) ?…
A: Bonds act as long-term debt for the issuer as the issuer is under the obligation to pay regular…
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- The coupon rate is greater than the yield to maturity when a bond sells at a premium. Select one: True Falsee. If the bondholder’s required rate of return equals the coupon interest rate, the bondwill sell at _________.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 determined
- State 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.”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 than1. (T/F) A putable bond will have a higher coupon than a bond without a put option, assuming both have the same maturity and risk profile
- Bonds. What is the relationship between the price of a bond and its YTM? All else being the same, which has more interest rate risk, a long-term bond or a short-term bond? What about a low coupon bond compared to a high coupon bond? What about a long-term, high coupon compared to a short-term, low coupon bond? Why?If the bondholder’s required rate of return equals the coupon interest rate, the bond will sell at _______________. A premium bond sells for ____________ as maturity approaches. The discount bond sells for ____________ as maturity approaches.Risk free rate can be derived from a triple A rated commercial bonds and the estimated price of options is dependent on the expected return of an investor. true or false?
- The yield to maturity on a bond a is fixed in the indenture. b is lower for higher-risk bonds. c is the required return on the bond. d is generally equal to the coupon interest rate.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) 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?