Question

In: Finance

Which of the following statements is FALSE? A. Coupon rate is determined by the bond issuer....

Which of the following statements is FALSE?

A.

Coupon rate is determined by the bond issuer.
B.

When YTM changes over time, coupon rate and coupon payments remain the same.
C.

Yield to Maturity (YTM) is set by market.
D.

When a bond issuer’s default probability increases, its YTM decreases.

Solutions

Expert Solution

A.) True because it the isssuer's right

B)True because, coupon rate and payment are fixed and based on the issue structure at the time of the issue

C)True because, YTM is dependant on the price of the bond which is set by the market

D)False because, when the default probability increases the risk increases and to compensate the increased risk higher YTM will be demanded by market.

So ans is D option

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

Which of the following statements is/are FALSE? I YTM is the discount rate that sets the...
Which of the following statements is/are FALSE? I YTM is the discount rate that sets the present value of the promised bond payments equal to the current market price of the bond. II To calculate the expected return, one should discount promised payments. III To calculate the YTM, one should discount expected payments. IV If there is a risk of default, then the bond’s expected return is greater than the YTM. V The realized return is always equal to the...
1. Which of the following statements about the world’s population is FALSE? a. the rate of...
1. Which of the following statements about the world’s population is FALSE? a. the rate of population growth has increased since the end of the twentieth century b. urbanization is taking place in developed, developing, and non-developed countries c. more people live in urban areas than in rural areas 2. Scientists want to know what effects, if any, there might be from increasing levels of UV-B radiation due to the stratospheric ozone hole. In an experiment to study the effects...
Which one of the following statements are TRUE or FALSE: 1.1. The bond strength of both...
Which one of the following statements are TRUE or FALSE: 1.1. The bond strength of both reactants and products affect the reaction rate [ 1] 1.2. In most cases where reactions occur in a solution, the more the concentration of reactants decreases, the more the reaction rate increases. [1 ] 1.3. In general, in irreversible gas phase reactions, the total pressure of the mixture affects the reaction rate more than the partial pressures of the reactants. [1 ] 1.4. If...
Which of the following statements is FALSE?
 Which of the following statements is FALSE? meiosis creates genetic diversity in sexually reproducing organisms gametes are haploid cells produced by meiosis mitosis produces four genetically identical daughter cells  somatic cells are diploid cells produced by mitosis
Which of the following statements is FALSE?
Which of the following statements is FALSE?a. The rate of second order reactions is dependent on concentration.b. The rate of a first order reaction is dependent on concentraion.c. The half life of a second order reaction is not dependent on concentration.d. The half life of a zero order reaction is dependent on concentration.e. None of the statements are FALSE.
Which of the following statements is false?
Which of the following statements is false? a. A discouraged worker is not counted as an unemployed worker b. The frictional unemployment rate is greater than the natural unemployment rate. c. The natural unemployment rate is greater than the structural unemployment rate d. The natural unemployment rate is equal to the sum of the frictional unemployment rate and the structural unemployment rate.
Which of the following presents the correct relationship? As the coupon rate of a bond increases,...
Which of the following presents the correct relationship? As the coupon rate of a bond increases, the bond's: a. face value increases b. current price decreases c. interest payments increase d. maturity date is extended EXPLAIN WHY ANSWER IS CORRECT AND WHY OTHERS ARE INCORRECT
Which of the following statements is FALSE? A. Treasury Bills are U.S. government zero-coupon bonds with...
Which of the following statements is FALSE? A. Treasury Bills are U.S. government zero-coupon bonds with a maturity of up to one year. B. Zero-coupon bond almost always sells at a discount. C. Coupon bond can sell at a discount, at par, or at a premium. D. Zero-Coupon Bond does not make coupon payments E. Coupon bond pays only face value and no coupon at maturity.
Which of the following statements is NOT CORRECT? a. When a bond's coupon interest rate is...
Which of the following statements is NOT CORRECT? a. When a bond's coupon interest rate is less than the market interest rate, the bond will sell at a value less than its par value and is known as a discount bond. b. Bonds are basically loans, so they usually make regular interest payments to the bondholders. The percentage of this interest payment relative to the bond's face value is called the coupon interest rate. c. For a fixed-rate bond, the...
Which of the following is false?The cost of capital:a) is determined by the source...
Which of the following is false?The cost of capital:a) is determined by the source of the fund.b) is an opportunity cost that depends on the use of the funds, not the source.c) is the same thing as the required rate of return.d) is the same as the WACC for projects with equal risk to the firm as a whole.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT