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

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

Fundamentals of Financial Management, Concise Edition (MindTap Course List)

9th Edition

ISBN:9781305635937

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter7: Bonds And Their Valuation

Section: Chapter Questions

Problem 3DQ: Looking at the bond issue selected, why are the current yield and yield to maturity numbers...

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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

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QUESTION 19 Which of the following is not a correct statement about the bond? Bond can be either non-interest-bearing or interest-bearing. Non-interest-bearing bonds sell at discount upon issuance. Price of a discount bond will go up as it approaches maturity. There is an inverse relation between the bond price and interest rate. Baseline interest rate for the bond market is LIBOR rate.
Looking at the bond issue selected, why are the current yield and yield to maturity numbers different? Briefly explain in words the difference between these two terms.
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
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Question 2 a) What are the main characteristics of a bond? Provide examples of different types of bonds in terms of coupons and maturity. b) Explain the difference between "coupon rate" and "yield to maturity", Show, using examples, how changes in the coupon rate and yield to maturity affects the bond price. c) You are asked to put a value on a bond which promises eight annual coupon payments of £50 and will repay its face value of £1000 at the end of eight years. You observe that other similar bonds have yields to maturity of 9 per cent. i) i) How much is this bond worth? (" You are offered the bond for a price of £755.5. What yield to maturity does this represent? d. You believe that next year XYZ plc will pay a dividend of £2 on its common stock Thereafter you expect dividends to grow at a rate of 4% a year in perpetuity. If you require a return of 12% on your investment. i. How much should you be prepared to pay for the stock? ii. Assuming that the expected stock price at the end…