What are the total return, the current yield, and the capital gains yield for the discount bond? (Assume the bond is held to maturity and the company does not default on the bond.)

Q: Why might a company choose to raise money through bonds, rather than take out a note payable or…

A: Bonds are the long-term liability of the company where the company raises the money in lieu of…

Q: Which of the following statements correctly describes the relationship between a long-term bond’s…

A: Coupon Rate: It is the rate of interest paid to the bondholder on the face value of the bond. It is…

Q: The price of a bond is the present value of promised future payments to the bondholder. A) True B)…

A: Bonds are units of securitized corporate securities that companies issue in the form of tradable…

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: Why would a company wish to reduce its bond indebtedness before its bonds reach maturity? Indicate…

A:

Q: How do you calculate the price of bonds if you have the par value, contract rate, and market rate

A: This question teals about If you know the par value, contract rate, and market rate of bonds, you…

Q: The relationship between bond prices and the interest rate bonds pay: Seleccione una: a. is Positive…

A: Companies issue bonds in order to meet their requirements of funds. Companies pay a fixed rate of…

Q: Why does the yield of a bond that trades at a discount exceeds the bond’s coupon rate?

A: Where yield to maturity(YTM) is exceed coupon rate payable on bond, the bond will trade at discount.…

Q: he yield-to-maturity of a typical corporate bond, relative to a US Treasury bond with the same…

A: Corporate Bond: It is a debt security issued by the company to raise capital from the investors.…

Q: What is the A  (single-A rated corporate bond)  Default Risk Premium (rdp)?

A: Treasury bill rate 5 year bond: Treasury rate for 5 year A bond is 5.90%.

Q: Describe what a common stock yield is and why it is important for an investor. Describe and explain…

A: Common stock yield- Common stocks are securities that represent individuals ‘ownership in a…

Q: a) In each of the following parts, write an expression that shows the relationship among the listed…

A: Bonds are debt instruments which are used as an instrument to raise funds. Issuer who raise debt has…

Q: What is the difference between the coupon rate and the current market interestrate of a bond?

A: It is the yearly interest rate rewarded to the bondholders. It stated as a percentage of face value.…

Q: The return on a bond is equal to the yield to maturity when     the holding period is longer than…

A: Explanation: The return on the bond is the return earned for holding the bond.   The yield to…

Q: Explain what a common stock yield is and why it matters to investors. Also, define and explain the…

A: The yield on common stocks: Common stocks represent individuals' ownership of a company. Individuals…

Q: When a company exercises its call provision on bonds, the company pays the book value of the bonds…

A: Call provision on the bond is the option held by the issuer for redeeming back the bonds if in case…

Q: he cost of debt is the _____ of the company's bonds. yield to maturity price current yield coupon…

A: Bond has YTM, coupon rate, its price and current yield

Q: When a company retires bonds early, the gain or loss on the retirement is the difference between the…

A: Formula: Maturity value = Bond Face value +  Interest

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: 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: If a company’s newest product flops in the marketplace, what effect is thatlikely to have on the…

A: Bond is debt-instrument that is used by entities to raise debt funds from public-at-large. Bonds pay…

Q: A “buy-and-hold” investor purchases a fixed-rate bond at a discount and holds it until it matures.…

A: An investor who invests in a bond can get returns in different forms and all the forms are related…

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: A bond backed by the future potential earnings and credit rating of the company is called a Group of…

A: A) Debenture bond is a type of bond which is unsecured by collateral. B) Serial bond is a type of…

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: Identify/explain the relationship between coupon rate and yield to maturity for:   Discount Bonds…

A: Coupon Rate:It is the amount that is paid by the issuer to the bondholder at the pre-determined…

Q: If a company sells its bonds at more than face value, the effective interest rate is a. less than…

A: The answer for the multiple choice question and relevant explanation are presented hereunder :

Q: How is a bond’s duration impacted by varying the coupon rate? How is a bond’s duration impacted by…

A: 1. Bond duration and coupon rate have inverse relation that means if coupon rate increase then the…

Q: When a company uses the the effective-interest method to amortize a bond discount amortization, the…

A: As per effective interest method, there are two ways of recognizing the interest expense. first the…

Q: Which of the follwing statement is correct. As the credit risk of a bond increases: A. The YTM…

A: Credit risk is risk of default of bond issues and as credit increase the required rate on bonds…

Q: Which of the following is FALSE regarding bonds? ) Long term bonds have greater interest rate risk…

A: A bond is an instrument that represents the loan that is made by the investor to the company and…

Q: how will the modified duretion of a floating coupon bond be compared to the modified duration of a…

A: A bond is a financial product that represents a loan that an investor makes to a borrower (usually a…

Q: What is the market rate of interest for a bond issue that sells for more than its face value?…

A: Bonds are instruments that are issued by an entity for the purpose of financing. It is a liability…

Q: Which of the following is the best explanation of what the call premium is?   Group of answer…

A: Call premium refers to the amount over (above) the par value of a share or bond which is payable to…

Q: When bonds are retired at​ maturity, ________. A. the carrying value always equals the face value…

A: Concept used:

Q: Can I use the yield to maturity (YTM) on a bond issued by the company as the cost of debt?

A: Yield to Maturity (YTM): It represents the rate at which the bond's total interest payments are…

Q: If interest rates increase after a bond issue, the yield-to-maturity will ______

A: YTM is the rate of return at which Price of bond is equal to its PV of future cash inflows.

Q: If the bondholder's required rate of return equals the coupon interest rate, the bond will sell at…

A: Introduction: Bonds: When company require funds then they go by issuing bonds. Bonds pay interest…

Q: price of a bond

A: Bonds are financial securities issued to public in exchange of debt funds raised from them.

Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.