A 15-year bond with an 8% annual coupon has a yield to maturity of 9%. Which of the following statements is correct? If the yield to maturity remains constant, the bond's price one year from now will be lower than its current price. O The bond's price at maturity will be below par. The bond's current yield is greater than 8%. The bond is selling at a premium. The bond is selling at par.

A 15-year bond with an 8% annual coupon has a yield to maturity of 9%. Which of the following statements is correct? If the yield to maturity remains constant, the bond's price one year from now will be lower than its current price. O The bond's price at maturity will be below par. The bond's current yield is greater than 8%. The bond is selling at a premium. The bond is selling at par.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A 20-year bond has a coupon rate of 8 percent, and another bond of the same maturity has a coupon rate of 15 percent. If the bonds are alike in all other respects, which will have the greater relative market price decline if interest rates increase sharply? Why?
A $1,000 bond with a coupon rate of 5.7% paid semiannually has five years to maturity and a yield to maturity of 7%. If interest rates rise and the yield to maturity increases to 7.3%, what will happen to the price of the bond? A. fall by $14.37 B. rise by $11.97 C. fall by $11.97 D. The price of the bond will not change.
You find a zero coupon bond with a par value of $10,000 and 21 years to maturity. The yield to maturity o this bond is 4.3 percent. Assume semiannual compounding periods. What is the price of the bond?
Given a bond with a coupon rate of 10% semi-annual interest, if the YTM is 11%, which statement is true about this security? A. This bond is trading at a Discount B. This bond is trading at Par. C. This bond is trading at a Premium D. Non of the above.
Suppose a seven-year, $1,000 bond with a 7.9% coupon rate and semiannual coupons is trading with a yield to maturity of 6.71%. a. Is this bond currently trading at a discount, at par, or at a premium? Explain. b. If the yield to maturity of the bond rises to 7.28% (APR with semiannual compounding), what price will the bond trade for? a. Is this bond currently trading at a discount, at par, or at a premium? Explain. (Select the best choice below.) A. Because the yield to maturity is less than the coupon rate, the bond is trading at a discount. B. Because the yield to maturity is less than the coupon rate, the bond is trading at a premium. C. Because the yield to maturity is greater than the coupon rate, the bond is trading at a premium. D. Because the yield to maturity is greater than the coupon rate, the bond is trading at par. b. If the yield to maturity of the bond rises to 7.28% (APR with semiannual compounding), what price will the bond trade for? The new price of the bond is $…
A 10-year bond with a 9% annual coupon has a yield to maturity of 8%. Which of the following statements is CORRECT? Group of answer choices If the yield to maturity remains constant, the bond's price one year from now will be lower than its current price. The bond is selling below its par value. The bond is selling at a discount. The bond's current yield is greater than 9%. If the yield to maturity remains constant, the bond's price one year from now will be higher than its current price.
Boeing Corporation has just issued a callable (at par) three-year, 4.9% coupon bond with semi-annual coupon payments. The bond can be called at par in two years or anytime thereafter on a coupon payment date. It has a price of $99.04. a. What is the bond's yield to maturity? b. What is its yield to call? c. What is its yield to worst? a. What is the bond's yield to maturity? The bond's yield to maturity is %. (Round to two decimal places.)
A $1,000 15-year bond reportedly sells for $850.Which of the following assertions is the most likely to be true?a. The yield to maturity of the bond is higher than the coupon rate.b. The bond's price would sit at $850 if the yield to maturity is stable before the bond matures.c. The present yield of a bond is equivalent to the coupon rate.d. Both b and c are true.e. All of the above claims are true.
A 10-year bond with a face value of $1,000 currently sells for $1,110. Which of the following statements is correct? Select one: a. The bond's yield to maturity is greater than its coupon rate. b. The bond's coupon rate exceeds its current yield to maturity. c. The bond's current yield is equal to its coupon rate. d. None of the given answers is correct.
If a bond's yield to maturity does not change, the return on the bond each year will be equal to the yield to maturity. Confirm this for both a premium and a discount bond using a 4-year 4.3 percent coupon bond with annual coupon payments and a face value of $1,000. Assume the yield to maturity is 3.3 percent. Assume the yield to maturity is 5.3 percent.
Suppose a seven-year, $1,000 bond with an 8.5% coupon rate and semiannual coupons is trading with a yield to maturity of 6.48%.
Which of the following statements is CORRECT? A 15-year bond with a face value of $1,000 currently sells for $950. Question 36 options: a) The bond's current yield is equal to its coupon rate. b) If the yield to maturity stays constant until the bond matures, the bond's price will remain at $850. c) The bond's yield to maturity is greater than its coupon rate. d) The bond's current yield exceeds its yield to maturity. e) The bond's coupon rate exceeds its current yield.

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