For a bond that is currently selling for par value (e, $1000), which one of the following relationships is correct (note: assume that all factors, other than the one mentioned, remain constant)? O1 if the coupon rate increases, the bond price will remain the same. 2) if the coupon rate increases, the bond price will decrease. O 31 ir the yield to maturity decreases, the bond price will decrease. O4) if the term to maturity increases, the bond price will remain the same. 5) If the yield to maturity increases, the bond price will remain the same.

For a bond that is currently selling for par value (e, $1000), which one of the following relationships is correct (note: assume that all factors, other than the one mentioned, remain constant)? O1 if the coupon rate increases, the bond price will remain the same. 2) if the coupon rate increases, the bond price will decrease. O 31 ir the yield to maturity decreases, the bond price will decrease. O4) if the term to maturity increases, the bond price will remain the same. 5) If the yield to maturity increases, the bond price will remain the same.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Coupon payments are fixed, but the percentage return that investors receive varies based on market conditions. This percentage return is referred to as the bond’s yield. Q1. Yield to maturity (YTM) is the rate of return expected from a bond held until its maturity date. However, the YTM equals the expected rate of return under certain assumptions. Which of the following is one of those assumptions? a. The bond is callable. b. The probability of default is zero. Consider the case of RTE Inc: Q2. RTE Inc. has 9% annual coupon bonds that are callable and have 18 years left until maturity. The bonds have a par value of $1,000, and their current market price is $1,130.35. However, RTE Inc. may call the bonds in eight years at a call price of $1,060. What are the YTM and the yield to call (YTC) on RTE Inc.’s bonds? Value YTM ? YTC ? Q3. If interest rates are expected to remain constant, what is the best estimate of the remaining life left for RTE Inc.’s bonds? a. 8 years b. 10…
What is the impact of bond price fluctuations on the yield or APR of a bond? When bond prices go down, the yield or APR goes up. When bond prices 90 up, the yield or APR also goes up Bond price fluctuations have noimpact on the yield or APR
i need the answer quickly
5. Bond yields Coupon payments are fixed, but the percentage return that investors receive varies based on market conditions. This percentage return is referred to as the bond's yield. Yield to maturity (YTM) is the rate of return expected from a bond held until its maturity date. However, the YTM equals the expected rate of return under certain assumptions. Which of the following is one of those assumptions? The bond will not be called. YTM YTC The bond has an early redemption feature. Consider the case of Swing Co.: Swing Co. has 9% annual coupon bonds that are callable and have 18 years left until maturity. The bonds have a par value of $1,000, and their current market price is $1,070.35. However, Swing Co. may call the bonds in eight years at a call price of $1,060. What are the YTM and the yield to call (VTC) on Swing Co.'s bonds? Value If interest rates are expected to remain constant, what is the best estimate of the remaining life left for Swing Co.'s bonds? 18 years 13 years 8…
14. Bond ABC has a current yield of 5% and Bond DEF has a current yield of 7%.If the market price of both bonds is similar, then the YTM on Bond DEF should be higher than the YTM on Bond ABC. Is this true or false? Why?
Which of the following statements is correct assuming same market rates for all maturities (flat yield curve)? e a Extendible bonds allow bond issuer to extend the maturity date. O b. Callable bonds give the bond issuer an option to call the bond back before the maturity date at a predetermined price. Oc. When the market yield is equal to a bond's stated coupon rate, the bond's current yield is greater than its coupon yield. Od. The cash price plus the accrued interest on the bond is the quoted price of the bond. Current yield is the ratio of annual coupon payment divided by the par value. o e.
Use the following information to answer this question. In your answers, ignore the negative sign, if any. Yield on Bond A Yield on Bond B Yield on Bond C 5.50% 6.50% 3.50% a) What is the yield spread between bonds A and B (in basis points)? b) What is the relative yield spread between bonds B and C? Bond C is your basis. c) What is the yield ratio between A and C? Bond C is your basis.
As the price of a bond □ a. rises; rises Ob. falls; falls c. rises; falls O d. falls; rises and the expected return , bonds become more attractive to investors and the quantity demanded rises.
All else held the same, an increase in time to maturity will cause an increase in the value of a bond. -Always, if the coupon rate is lower than the YTM -Always -Always, if the coupon rate is higher than the YTM -Never
G
Which are TRUE about the inverse relationship between price and yield: a. when interest rates rise; bond prices fall b. interest rates have no effect on the price of a zero-coupon bond c. when yields go up; prices go down d. the yield on a 30-year bond goes up when interest rates go up
Coupon payments are fixed, but the percentage return that investors receive varies based on market conditions. This percentage return is referred to as the bond's yield. Yield to maturity (YTM) is the rate of return expected from a bond held until its maturity date. However, the YTM equals the expected rate of return under certain assumptions. Which of the following is one of those assumptions? O The bond is callable. O The probability of default is zero. Consider the case of Demed Inc.: Demed Inc. has 9% annual coupon bonds that are callable and have 18 years left until maturity. The bonds have a par value of $1,000, and their current market price is $950.35. However, Demed Inc. may call the bonds in eight years at a call price of $1,060. What are the YTM and the yield to call (YTC) on Demed Inc.'s bonds? Value YTM YTC If interest rates are expected to remai constant, what is the best estimate of the remaining life left for Demed Inc.'s bonds? O 5 years O 13 years O 18 years O 8 years…