Which of the following is correct? If you pay a price above its face value to buy a bond, your return will be higher than its coupon rate. When market rate is greater than coupon rate, the bond has a price below its face value. O When determining the value of a bond that payments semi-annual payments, one need to use semi-annual coupon rate to determine the coupon payments and semi-annual market rate as discount rate.

Which of the following is correct? If you pay a price above its face value to buy a bond, your return will be higher than its coupon rate. When market rate is greater than coupon rate, the bond has a price below its face value. O When determining the value of a bond that payments semi-annual payments, one need to use semi-annual coupon rate to determine the coupon payments and semi-annual market rate as discount rate.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 5MC: What would be the value of the bond described in Part d if, just after it had been issued, the...

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What would be the value of the bond described in Part d if, just after it had been issued, the expected inflation rate rose by 3 percentage points, causing investors to require a 13% return? Would we now have a discount or a premium bond? What would happen to the bond’s value if inflation fell and rd declined to 7%? Would we now have a premium or a discount bond? What would happen to the value of the 10-year bond over time if the required rate of return remained at 13%? If it remained at 7%? (Hint: With a financial calculator, enter PMT, I/YR, FV, and N, and then change N to see what happens to the PV as the bond approaches maturity.)
What is the stand-alone risk? Use the scenario data to calculate the standard deviation of the bonds return for the next year.
What is the stand-alone risk? Use the scenario data to calculate the standard deviation of the bonds return for the next year.
What do you have to do to the interest rate and years of maturity if a bond pricing problem tells you that interest is compounded quarterly?
. If the current interest rate exceeds the bond’s coupon rate, the bond will sell at a___________. The value of a bond to increase if there is a/an ________ in interest rates. A bond’s coupon rate is more than the interest rate, therefore the bond is selling at a_____________. As interest rate increases the value of a bond will ______________. 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. A bondholder with a short-term bond is exposed to ___________ interest rate risk than when owing a long-term bond. When interest rates __________, the market required rates of return ________, and the bond prices will ________. If interest rates increase after a bond issue, the yield-to-maturity will ______,
If the bondholder's required rate of return equals the coupon interest rate, the bond will sell at ..................
Which of the following statements correctly describes the sensitivity of a bond’s price to a change in market yields? Group of answer choices A. The price of a zero-coupon bond with four years until expiry is going to be more sensitive to changes in market yields than the price of a coupon paying bond issued by the same company with the same term to expiry. B. Holding all other factors constant, the longer the term to expiry, the less sensitive a bond’s price is to changing market yields. C. Holding all other factors constant, the higher the coupon rate, the more sensitive is a bond’s price to changing market yields. D. More than one of the other statements are correct.
Which of the following statements is CORRECT? a. If a coupon bond is selling at par, its current yield equals its yield to maturity. b. If a coupon bond is selling at a discount, its price will continue to decline until it reaches its par value at maturity. c. If interest rates increase, the price of a 10-year coupon bond will decline by a greater percentage than the price of a 10-year zero coupon bond. d. If a bond's yield to maturity exceeds its annual coupon, then the bond will trade at a premium. e. If a coupon bond is selling at a premium, its current yield equals its yield to maturity.
Which one of the following will decrease the current yield of a bond? changing the frequency of coupon payment from semi-annual to annual. increasing the face value. increasing the coupon rate. decreasing the yield to maturity. decreasing the bond price.
e. If the bondholder’s required rate of return equals the coupon interest rate, the bondwill sell at _________.
Which of the following statements is CORRECT? a. If a coupon bond is selling at par, its yield to maturity is equal to zero. b. If a coupon bond is selling at a discount, its price will continue to increase until it reaches its par value at maturity. c. If interest rates increase, the price of a 10-year coupon bond will decline by a greater percentage than the price of a 10-year zero coupon bond. d. If a bond's yield to maturity exceeds its annual coupon, then the bond will trade at a discount. e. If a coupon bond, is selling at a premium, its yield to maturity is equal to zero. ANSWER IS NOT C
Which of the following statements is correct assuming same market rates for all maturities (flat yield curve)? e a Extendible bonds allow bond issuer to extend the maturity date. O b. Callable bonds give the bond issuer an option to call the bond back before the maturity date at a predetermined price. Oc. When the market yield is equal to a bond's stated coupon rate, the bond's current yield is greater than its coupon yield. Od. The cash price plus the accrued interest on the bond is the quoted price of the bond. Current yield is the ratio of annual coupon payment divided by the par value. o e.