Answered: As bond maturity increases, the bond's…

As bond maturity increases, the bond's risk: OA. B. OC. O D. O E. Increases Decreases Does not change Sometimes increases and sometimes decreases Is inversely related to the value of the bond

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 11MC: When a bond sells at a discount, the carrying value ________ after each amortization entry. A....

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A bond is a debt instrument used to raise capital from investors. It pays back the lender in the form of coupons and face value. It is one of the most used methods of debt financing.

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QUESTION 25 The of a bond is the face value, or amount of principal that the bond is worth when the principal amount is due. O a. Coupon rate O b. Par value c. Maturity d. Current yield O e. Yield to maturity
D Question 3 Which of the following statements is CORRECT? O If a bond's yield to maturity exceeds its coupon rate, the bond will sell at a premium over par. O All else equal, if a bond's yield to maturity increases, its current yicld will fl. O Ifa bond's yield to maturity exceeds its coupon rate, the bond will sll at par. O All else equal, ifa bond's yield to maturity increases, its price will fll
QUESTION 4 Value of a putable bond is A. O value of callable bond -option cost B. O value of nonputable bond + value of put option C. O value of nonputable bond - value of put option D. O value of putable bond + strike price
QUESTION 8 In the present value bond valuation model, risk is generally incorporated into the O timing of cash flows (assuming more risky cash flows are received early). O discount rate or required return. O cash flows (making some smaller if they are more risky). O maturity amount.
Question 7 Which of the following bond has no reinvestment risk? O A bond that has a higher coupon rate than the yield-to-maturity O A bond that has a lower coupon rate than the yield-to-maturity A zero-coupon bond
Question 4 Assuming a bond is issued at a discount, which of the following would definitely not change over the life of the bond? A The yield to maturity of the bond B The price of the bond C The coupon rate of the bond D The current yield of the bond
Question 7 In a typical bond, all of the following are fixed except O yield to maturity O coupon rate O maturity O face value (CH2)
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QUESTION 2 Which of the following statements about bond is incorrect? A. • The longer the maturity, the more sensitive the bond's price to changes in yield to maturity. B. Yield to maturity assumes that all bond coupons can be reinvested at the same level of yield to maturity. The relationship between bond prices and yields to maturity is convex. D. The relationship between bond prices and yields to maturity is inverse. E. For a premium bond, the coupon rate is smaller than current yield.
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