Which of the following would result in a decrease in bond prices?   Question 8 options:   Interest rates decrease.   Time passes and a discount bond moves closer to maturity.   The bond rating of a bond changes from BBB to C.

Q: As the market interest rate drops, a bond’s price _____.

A: Explanation : In simple words, the bond's coupon is the rate of return that the investor will get…

Q: A bond with a 7.3 yield has a modified duration of 5.4 and is trading at 985. If the yield decreases…

A: Given information: Duration (D)=5.4Yield (y)=7.3%Change in yield (△y)=-2%Price(P)=985

Q: 2) You find bond A priced to yield 6%, and a similar-risk bond B priced to yield 6.5%. If you expect…

A: Solution:- Yield means the return earned by the bond holder if he holds the bond until maturity.

Q: What makes duration of a bond different from its term to maturity? Answer must be limited to one…

A: Duration of a bond refers to the sensitivity of the price of a bond to the changes in the interest…

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: A general rule in bond valuation is that a decline in interest rates causes bond prices to a. rise…

A: Bond is a debt fixed interest bearing instrument that is issued by the company to raise funds from…

Q: a) Do you agree with the following statement, and explain why? “If two bonds have the same…

A: Answer: a) Bonds are the units that represent corporate debt and are issued by corporations. The…

Q: i. How would you expect the price of the callable bond to compare to that of the non-callable bond?…

A: Callable bond is a bond which can be redeemed before the period of maturity. It is also called as…

Q: 2. For each of the following situation, identify whether a bond would be considered a premium bond,…

A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…

Q: f the current yield of a bond goes down from 6.9% to 4.8%, by what percent does the market price…

A: In terms of finance, current yield can be defined as the return on the bond investment. The formula…

Q: The yield to maturity on a bond is A. below the coupon rate when the bond sells at a discount and…

A: Yield to Maturity : It is the expected rate of return that an investor in the bond may earn on his…

Q: which would experience greater percentage increase in price given a decrease in interest rates?

A: Computation of percentage increase:

Q: Calculating the risk premium on bonds The text presents a formula where (1+) = (1-pX1+i+x)+ p(0)…

A: In the given formula:(1+i)= (1-p)(1+i+x)+p(0)a) Rate of interest on risky bond , when  the…

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: When interest rates ________, the prices of currently outstanding par-bonds ___________. Select…

A: When interest rates increases, the price of the bond reduces at low coupon rate where the bond is…

Q: Default risk refers to the value a bond investor will lose if the issuer defaults. It as a…

A: Risk is defined in monetary terms as the possibility that the actual return from a result or…

Q: Which of the following is correct? a. The YTM of a bond is its IRR b. Call premium rises as a bond…

A: YTM of bond is the rate of return that the bondholder will get if they hold bond till maturity and…

Q: Which type of bonds offer a higher yield? Callable bonds Noncallable bonds Answer the following…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

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: The market price of a bond issued at a discount is the present value of its principal amount at the…

A: If a bond is sold at a lesser price than its face value is known as issue of bond at discount.

Q: An investor believes that a bond may temporarily increase in credit risk. Which of the following…

A: Credit risk shows that the borrower is unable to pay the required payment. A credit default swap…

Q: Which of the following is correct?   Group of answer choices 1. The lower the price you pay for a…

A: An overpriced bond is one whose price is more than its value. Therefore, 2nd option is incorrect.…

Q: Bond analysts might be more interested in a bond's yield to call if A) the bond's yield to maturity…

A: Yield to call is the internal rate of return of cash flows of the bond with the current market…

Q: The method used to value a default-free zero coupon bonds (such as T-bills) requires that the…

A: In zero coupon bond there is no coupon available during life of bond. so these are called zero…

Q: Do you agree with the following statement, and explain why? “If two bonds have the same duration,…

A: Bonds are the financial market instruments that represent the debt taken by a corporation from the…

Q: he following statements is TRUE? emand for a bond declines when it becomes less liquid, decreasing…

A: A liquid asset is one that can be converted to cash quickly and easily. Liquid assets include cash,…

Q: Interest rate risk; a.is lesser for bonds with a longer term as compared to bonds with a shorter…

A: The risk of investment losses due to the shift in interest rates is known as interest rate risk. It…

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: Bond Relationships. Select one or more of the following phrases to complete the following sentences.…

A: price of bond is inversely proportional to the interest rate.

Q: Which of the following situations would require an increase in the coupon rate for a bond selling at…

A: Bond can be sold at par, premium or discount

Q: Comment on the attractiveness of the bonds in two ways: a) How does the yield compare to the…

A: YTM of bond means ,yield per annum bond will pay upto the date of his maturity.

Q: . If interest rates suddenly rise by 3 percent, what is the percentage change in the price of these…

A: Bonds: These are debt instruments issued by the firm to raise debt capital. The issuer pays the…

Q: Over the term of the bonds, the amount of unamortized discount will a. be unaffected until the…

A: Bonds are those note which are traded in the public market and these are sold for more or less than…

Q: Which of the following statements is CORRECT? a. A bond is likely to be called if it sells at a…

A: Bonds are the secured instruments which generate fixed income for the investors in the form of…

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

A: Relationship between the bond price and YTM is inverse. If YTM is increased bond price will be…

Q: he longer the term a bond has before it matures, ______________ will be the affect on its value due…

A: This pertains to sensitivity of bond price or bond value to changes in interest rates. Long term…

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: All else the same, a will decrease the required return on a bond. Select one: O a. sinking fund O b.…

A: Required return on the bond is affected by several factors such as the credit rating of the bond and…

Q: Which are TRUE about the inverse relationship between price and yield: a. when interest rates rise;…

A: Bond price is the present value of the bond's future cash flows, prices of bonds are rise or fall…

Q: The market rate of interest for a bond issue that sells for more than its face value is      a.…

A: Bonds payable are one of the sources of finance and are shown as liability. If the stated interest…

Q: Which of the following statements is TRUE regarding bonds? O A. At maturity, lenders repay a bond's…

A: Bond is the fixed income security which promises the holder future coupons.

Q: Refer to Chapter 10, page 567: Stated rate of interest versus the market rate of interest Required…

A: Bonds are a form of debt or liability being issued by the business, on which regular interest…

Q: If the bond issuance is realized, how will the interest and TL be respectively? A) decreases –…

A: Bond is an investment instrument in which an investor receives a fixed amount of money. The investor…

Q: Assuming a bond is issued at a discount, which of the following would definitely not change over the…

A: Bonds may be issued at par , premium or discount. Bond with coupon rates higher than the YTM will be…

Q: Which of the following is not an effect of a call provision? A. Issuer can refund the bond issue if…

A: A call provision is right of the issuer to redeem bonds before maturity

Q: if an investor expects interest rates to _______________ she/he will choose a bond with

A: A bond is a debt component issued by the entity for generating cash. It is recorded as non-current…