1. Which of the following $5,000 face-value securities has the highest yield to maturity?
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2. The current interest rate on a 10-year treasury note (with face value = $100 and annual coupon rate = 2.625%) is 3.37%. If the price of this treasury note goes up, its ____. (There are more than one answer.)
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coupon rate drops below 2.625%. |
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coupon rate rises above 2.625%. |
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interest rate drops below 3.37.%. |
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interest rate rises above 3.37%. |
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interest rate does not change. |
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coupon rate does not change. |
3. A two-year bond with $1,000 face-value and 10% coupon rate is sold for $1,000 today (Year 1). If one year later (Year 2) the market interest rate increases by 5%, then this bond will have a market price of $ _____ (round UP the nearest integer) next year (Year 2).
Introduction:
The highest yield to maturity from a bond is possible when the bond is held up to maturity. Holding a bond up to maturity means when the face value of the bond is paid & also when the bond agreement comes to an end.
Hi Student,
Thanks for the questions. As per Bartleby answering guidelines we can answer only the first question if there are multiple questions. Please post rest of the questions separately. Thank You.
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