What is the difference between a bond's coupon rate and its required return

Q: bond

A: Convexity can be defined as a measure which explains the relationship between price & yield of…

Q: What impact do interest rates have on bond prices? What are the basic assumptions that go into…

A: This question explains about the fundamental assumptions that go into establishing the value of a…

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: 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: 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: Why do bond prices and bond yields move inversely?

A: A bond is referred to as a fixed-income instrument since it pays debt holders a fixed interest rate…

Q: ole do bond length and bond convexity play in determining the interest rate risk of

A: In the bond portfolio interest is one of the major factor affecting on the bond.

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: Is Treasury Bond Yield, the risk free rate?   Yes or No. Explain.

A: Introduction: Risk free rate is nothing but an investment’s return rate with no chance of loss. The…

Q: Under what conditions will a discount bond have anegative nominal interest rate? Is it possible for…

A: A discount bond is a bond that is issued for less than its par—or face—value. Discount bonds may…

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: What is the connection between the interest rate and the price of a fixed-coupon bond? Why is it…

A: Interest rate is the rate that is prevailing in the market on which you can invest your money. Fixed…

Q: Discuss the problems with the traditional bond pricing approach by using the yield to maturity?

A: Bond valuation is the method of finding the fair value of the bond. The fair value means the…

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: what is the current yield of the bond?

A: Current Yield of Bond: it is can be said as the yield obtained by a bond on current price or how…

Q: What impact do interest rates have on bond prices? What are the key assumptions that go into…

A: The answer are as follows

Q: State whether the following statement is True or False and explain why. “A bond’s price is higher…

A: Generally, when the bonds fixed coupon rate is the amount of fixed annual interest paid by the…

Q: When would it make sense for a firm to call a bond issue? A) when the market price of the bond…

A: Bonds are debt securities issued by Government or other companies, who seek to raise money from…

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: Identify and discuss the relations among a bond’s coupon rate, the yield required by the market, and…

A: Bond prices are the price that we see trading in the market. these prices can be calculated by…

Q: Why does the market value differ from its par value when the coupon interest rate does not equal the…

A: Par Value is the denominated value of bond which is used for coupon calculation whereas market price…

Q: what is the yield in percent, on the bond held to maturity?

A: Market Price of bond = $970  Future Value of bond after one year = $1,000   Formula:Current Value of…

Q: f the curvature in the relationship between bond prices and bond yields.

A: Macaulay duration of bond is weighted average no. of times fixed cash flows associated with bond…

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: What is the difference between a bond's coupon rate and its current market interest rate?

A: Bond's coupon rate is the cash interest rate that the bond is actually providing to the bond holders…

Q: What is the relationship between the price of a fixed coupon bond and the interest rate? Why does…

A: Bonds are issued by the company to meet the financial requirements of the company without losing its…

Q: What happens when a bond's market rate is less than the stated rate?

A:

Q: What variables influence the bond market's interest rates

A: This question explains about a variety of factors influences interest rates in the bond market.

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: 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’s the logic behind the bond-yield-plus-risk-premium approach?

A: Bond yield plus a risk premiumAn approach that applies to an entity’s equity that is being traded…

Q: What is the difference between the coupon rate and the current interest rate for a bond?

A: Coupon rate: It is the rate of interest being paid off for the fixed income security such as bonds.…

Q: Should the rate of return of a call option on a long-term Treasury bond be more or less sensitive to…

A: The financial contracts available which give the buyer the right to buy a stock or underlying asset…

Q: In the case of a bond, what is the difference between its coupon rate and the current market…

A: This question explains about the case of a bond,  coupon rate and the current market interest rate

Q: The yield spread between two bond issues reflect more than just credit risk.  What other factors…

A: Bond refers to the securities in which an investor lends money to the government in exchange for…

Q: Which of the following is TRUE concerning the distinction between interest rates and returns? Select…

A: The Rate of return refers to a rate at which return is generated which is based on the initial…