Which of the following is the correct ranking for the bond price? Bond Coupon Rate Maturity (years) YTM A 6% 8 6.5% B 6% 8 7% C 7% 7 6.5% A > B > C B > C > A C > A > B
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Which of the following is the correct ranking for the
Bond |
Coupon Rate |
Maturity (years) |
YTM |
A |
6% |
8 |
6.5% |
B |
6% |
8 |
7% |
C |
7% |
7 |
6.5% |
A > B > C |
||
B > C > A |
||
C > A > B |
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- The following information about bonds A, B, C, and D are given. Assume that bond prices admit noarbitrage opportunities. What is the convexity of Bond D?Cash Flow at the end ofBond Price Year 1 Year 2 Year 3A 91 100 0 0B 86 0 100 0C 78 0 0 100D ? 5 5 105Which of the following is the correct ranking for the bond price? Bond YTM Maturity (years) Coupon rate A 6% 6 5% B 6% 6 5.5% C 5% 6 5.5% A<B<C B<A<C C<B<Aa. What is the price (expressed as a percentage of the face value) of a one-year, zero-coupon corporate bond with a AAA rating?b. What is the credit spread on AAA-rated corporate bonds?c. What is the credit spread on B-rated corporate bonds?d. How does the credit spread change with the bond rating? Why? Security Yield Treasury 3.120AAA corporate 3.874BBB corporate 4.521B corporate 5.328
- You are given the following prices and cash flows associated with bonds. CF stands for cash flow. Bond Price Today CF Year 1 CF Year 2 CF Year 3 A 105.185 10 10 110 B 90.371 100 0 0 C 91.784 5 105 0 D X 15 15 115 What is the current price of Bond D as per the no-arbitrage principle? In other words, what is the value of X?If a P1,000 bond sells for P1,125, which of the following statements are correct? I. The market rate of interest is greater than the coupon rate on the bond. II. The coupon rate on the bond is greater than the market rate of interest. III. The coupon rate and the market rate are equal. IV. The bond sells at a premium. V. The bond sells at a discount. a. I and IV b. I and V c. II and IV d. II and VGiven the following spot rates, calculate the value of a 3-year, 6% annual-coupon bond. Spot rates: 1-year: 5% 2-year: 5% 3-year: 6% A. $1,001.56 B. $1,044.73 C. $1,094.56 D. $1,114.29
- Rank the following bonds in order from lowest credit risk to highest risk all with the same time to maturity, by their yield to maturity: (Rank: 1 = lowest, 4 = highest) Treasury bond with yield of 4.65 percent United Airline bond with yield of 9.07 percent Bank of America bond with a yield of 6.25 percent Hewlett-Packard bond with yield of 6.78 percentFrom page 9-2 of the VLN, what is the first thing you want to identify when approaching a bond problem? Group of answer choices A. Annual bond or semiannual bond B. Whether the market rate is different from the stated rate. C. The cash flows provided by the bond. D. The company's debt to equity ratio.If the YTM on the following bonds are identical except, what is the price of bond B? Bond A Bond B Face value $1,000 $1,000 Semiannual coupon $45 $35 Years to maturity 20 20 Price $1,098.96 ?
- Using the following information, determine the default risk premium on the 10 year AA corporate bond: Rate % inflation 1.96 T-bill 5.00 10y T-Bond 6.00 10y AAA Corporate 6.46 10y AA Corporate 7.76Given the following information, why is one bond’s yield higher than the other’s? Which bond is riskier? Why? Please also indicate whether each bond is traded at par, discount, or premium and explain why. Issuer Name Coupon Maturity Rating Moody's/S&P/Fitch Yield % GENERAL MOTORS 7.000% Nov 2025 Ba1/BB+/BB+ 6.313 GENERAL MOTORS 8.000% Nov 2031 Ba1/BB+/BB+ 6.838Calculate the accrued interest (in $) and the total purchase price (in $) of the bond purchase. (Round your answers to the nearest cent.) Company CouponRate MarketPrice TimeSince LastInterest AccruedInterest Commissionper Bond BondsPurchased TotalPrice Company 1 8.75 102.50 78 days $ $3.50 15 $