Holding other factors constant, the interest-rate risk of a coupon bond is higher when the bond's:Select one:a. term-to-maturity is lower or coupon rate is lower or yield to maturity is higherO b. term-to-maturity is higher or coupon rate is higher or yield to maturity is lowerOc. term-to-maturity is lower or coupon rate is lower or yield to maturity is lowerd. term-to-maturity is higher or coupon rate is lower or yield to maturity is highere.None of the answers are correct

Term-to-Maturity: Bonds with longer maturities are more sensitive to interest rate changes because…

Answered: Holding other factors constant, the…

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

See similar textbooks

Similar questions

A zero coupon bond has more interest rate risk than a comparable coupon bond. true or false
1. Use the following statements to answer questions 1-2. Statement 1: Modified duration is a better measure for a bond’s sensitivity for shaping risk than key rate duration. Statement 2: Effective duration is a better measure for a bond with an embedded option than modified duration. Statement 3: Spread duration is a measure of the risk-free rate change. Statement 4: Modified duration is a measure of curve duration. A. Statement 3 B. Statement 4 C. Both statement 3 and 4 D. Neither statement
All else equal, a bond would be sold at __________ if its coupon rate is _________ its yield to maturity. a. premium, lower than b. par, equal to c. discount, greater than d. discount, equal to
a) All things being equal If a bond's coupon rate is higher than its yieldto maturity (YTM), is the bond selling at a discount, premium or par?b) All things being equal If a bond's coupon rate is lower than its yield tomaturity (YTM), is the bond selling at a discount, premium or par?c) All things being equal If a bond's coupon rate is equal to its yield tomaturity (YTM), then is the bond selling at a discount, premium or par?d) All else being equal, the longer the term to maturity, the greater orthe lower the duration?f) All else being equal, the higher the coupon rate on the bond, theshorter or the longer the duration of the bond?
yield to maturity implies a bond price. a. lower; lower b. higher; lower c. higher; higher d. None of the above A.
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.
For a premium bond, the: Multiple Choice O current yield is equal to the coupon rate but less than the yield to maturity. O yield to maturity exceeds both the coupon rate and the current yield. O coupon rate is equal to the yield to maturity but less than the current yield. current yield is less than either the coupon rate or the yield to maturity. coupon rate exceeds both the yield to maturity and the current yield.
Bond A is a par bond and Bond B is a premium bond. All else equal, which bond has the lower coupon rate? Select one: a. B b. A=B c. A
mc attached
A bond will sell at a premium when its coupon interest rate: is lower than the market interest rate on similar bonds. O exceeds the market interest rate on similar bonds. O varies more than the market interest rate on similar bonds. O equals the market interest rate on similar bonds.
How does the price-yield relationship for a callable bond compare to the same relationship for an option-free bond? The price-yield relationship is best described as exhibiting: negative convexity at low yields for the callable bond and positive convexity for the option-free bond the same convexity for both bond types negative convexity for the callable bond and positive convexity for an option- free bond
Give typing answer with explanation and conclusion Question 16: Which of the following statements about convexity are true? I. Convexity accounts for the curvilinear function of bond rates II. A bond with a very low coupon and a long maturity will have low convexity III. A bond investor would seek to avoid bonds with high convexity. IV. Convexity is defined as the rate of change of the slope of the price/yield curve V. There is an inverse relationship between maturity and convexity a. I. b. II. III. IV. c. I. IV. d. II. IV. V. e. I. II. IV. V.

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS