Question
In: Finance
5. The yield to maturity on a bond is ________. A. below the coupon rate when...
5. The yield to maturity on a bond is ________.
A. below the coupon rate when the bond sells at a discount, and equal to the coupon rate when the bond sells at a premium.
B. the discount rate that will set the present value of the payments equal to the bond price.
C. based on the assumption that any payments received are reinvested at the coupon rate.
D. none of the above.
6. Ceteris paribus, the duration of a bond is negatively correlated with the bond's
A. time to maturity.
B. coupon rate.
C. yield to maturity.
D. B and C
7. Holding other factors constant, the interest-rate risk of a coupon bond is higher when the bond's:
A. term-to-maturity is higher.
B. coupon rate is higher.
C. yield to maturity is higher.
D. all of the above
8. Holding other factors constant, the interest-rate risk of a coupon bond is lower when the bond's:
A. term-to-maturity is lower.
B. coupon rate is higher.
C. yield to maturity is lower.
D. A and B. E.
Solutions
jeff jeffy answered 2 years agoRelated Solutions
The duration of a bond with 8% annual coupon rate when the yield to maturity is...
The duration of a bond with 8% annual coupon rate when the yield
to maturity is 10% and two years left to maturity is:
Question 10 options:
1)
1.75 years
2)
1.80 years
3)
1.92 years
4)
2.96 years
Epson has one bond outstanding with a yield to maturity of 5% and a coupon rate...
Epson has one bond outstanding with a yield to maturity of 5%
and a coupon rate of 8%. The company has no preferred stock.
Epson's beta is 0.9, the risk-free rate is 0.6% and the expected
market risk premium is 6%.
Epson has a target debt/equity ratio of 0.7 and a marginal tax
rate of 34%.
1. What is Epson's (pre-tax) cost of debt?
2. What is Epson's cost of equity?
3. What is Epson's capital structure weight for equity,...
If the yield to maturity and the coupon rate are the same, then the bond should...
If the yield to maturity and the coupon rate are the same, then the
bond should sell for ______.
a. a premium b. a discount c. par value
What is the coupon rate of an annual coupon bond that has a yield to maturity...
What is the coupon rate of an annual coupon bond that has a
yield to maturity of 5.5%, a current price of $949.81, a par value
of $1,000 and matures in 15 years?
6.33%
4.70%
3.07%
5.00%
If the yield of maturity of the bond is lower than the coupon rate, the price...
If the yield of maturity of the bond is lower than the coupon
rate, the price of this bond will be?
Select one:
a. Higher than the par value.
b. Lower than the par value.
c. Equal the par value.
The situation in which the current market price is greater than
intrinsic value is called:
Select one:
a. All answers are incorrect.
b. Equilibrium.
c. Stock undervalued.
d. Stock overvalued.
An investor is considering purchasing a 10-year zero-coupon bond
of...
A bond with a coupon rate of 7 percent sells at a yield to maturity of...
A bond with a coupon rate of 7 percent sells at a yield to
maturity of 8 percent. If the bond matures in 11 years, what is the
Macaulay duration of the bond? What is the modified duration?
A bond with a coupon rate of 7 percent sells at a yield to maturity of...
A bond with a coupon rate of 7 percent sells at a yield to
maturity of 9 percent. If the bond matures in 12 years, what is the
Macaulay duration of the bond? What is the modified duration? (Do
not round intermediate calculations. Round your answers to 3
decimal places.)
Duration
Macaulay
years
Modified
years
A zero-coupon bond with 4 years to maturity and the yield to maturity of 8%. When...
A zero-coupon
bond
with 4 years to
maturity and the yield to maturity of 8%. When the yield
increases,
the duration
of this bond
decreases.
a. True b.
False
2) A bond issuer often
repurchases Callable
bonds for
a discount
bond.
a. True b.
False
Credit
Default Swap (CDS) is an insurance policy on default
risk of corporate bond or loan.
a. True b.
False
4) The delivery of the
underlying asset is seldom made in forward
contracts while the...
You own a 10-year bond paying an annual coupon rate of 5%. The yield to maturity...
You own a 10-year bond paying an annual coupon rate of 5%. The
yield to maturity on the bond is 7%. The face value, as usual, is
$1000. What is the value of the bond today?
Assume you own a bond with a 5% coupon, a 6% yield-to-maturity, 5 years to maturity,...
Assume you own a bond with a 5% coupon, a 6% yield-to-maturity,
5 years to maturity, and a $1,000 par value. It is currently priced
at $957.35. If the yield-to-maturity increases to 8.0%, what is the
price of the bond? Select one: a. $1,043.76 b. $878.33 c. $1,000 d.
$1,087.52
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