If a bond has a coupon rate lower than the market interest rate, the bond will sell at:A) Par valueB) A premiumC) A discountD) Its face valuehelp.
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If a bond has a coupon rate lower than the market interest rate, the bond will sell at:
A) Par value
B) A premium
C) A discount
D) Its face value
help.
Step by step
Solved in 2 steps
- If a bond has a coupon rate lower than the market interest rate, the bond will sell at:A) Par valueB) A premiumC) A discountD) Its face valueIf a bond’s coupon rate is lower than the market interest rate, the bond will sell at:A) A premiumB) A discountC) Par valueD) Book value dont use aiThe yield to maturity on a bond a is fixed in the indenture. b is lower for higher-risk bonds. c is the required return on the bond. d is generally equal to the coupon interest rate.
- A bond will be priced at a discount to par value if its coupon rate is less than its yield-to-maturity (YTM). Select one: True FalseFor a discount bond, the current yield isthe yield to maturity, and the coupon rate is the yield to maturity. Select one: O a. less than; less than O b. equal to; equal to O c less than; greater than O d. greater than; greater than O e. greater than; less thanA bond will sell at ____________ if the required return is greater than the coupon rate. Select one: a. A discount b. Liquidation value c. Par d. A premium
- 2. For cach of the following situation, identify whether a bond would be considered a premium bond, a discounted bond, or a par bond. a. A bond's current market price is greater than its face value. b. A bond's coupon rate is equal to its yield to maturity. c. A bond's coupon rate is less than its required rate of return. d. A bond's coupon rate is less than its yield to maturity. e. A bond's coupon rate is greater than its yield to maturity. f. A bond's fair present value is less than its face value. Answer: a. ..... b. с. d. e. f.A bond’s expected return is sometimes estimated by its yield to maturity (YTM) and sometimes by its yield to call (YTC). The YTC is a better estimate when the bond sells at... a. a discount. b. a premium. c. par value.If a bond sells for its par value, the coupon interest rate and yield to maturity are equal. True False *
- A bond has a market price that exceeds its face value. Which one of these features currently applies tothis bond?Select one:a. Yield to maturity less than the coupon rate.b. Currently selling at par.c. Current yield greater than coupon rate.d. Yield to maturity equal to the current yield.e. Discount bond.An option free bond’s value/price has an inverse relationship with interest rates/yield. If yields increase, the value of a bond decreasesA bond's real rate of return is reflected by the bond's 1). YTM 2). Coupon Rate 3). Par Value 4). Selling Price 5). Redemption Value