If the contract rate on the bond is 13% and the market interest rate at the time of sale is 13.2%, then the bond will sell at:Multiple ChoicePremiumUnable to answer with the data providedParCannot be sold in the marketDiscount

When the contract rate on a bond is lower than the market interest rate, the bond is sold at a…

Answered: If the contract rate on the bond is 13%…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Similar questions

A bond presently has a price of $1,030. The present yield on the bond is 8.00%. If the yield changes from 8.00% to 8.10%, the price of the bond will go down to $1,020. The duration of this bond is __________. -10.5 -8.5 9.7 10.5 11
A bond with a 8-year duration is worth $1,077, and its yield to maturity is 7.7%. If the yield to maturity falls to 7.57%, you would predict that the new value of the bond will be approximately Multiple Choice $1,075.60 $1,077.00 $1,087.45 $1,078.40
A bond promises to pay $150 in one year. What is the interests rate on the bond if its price today is $65,$75 and $85?
Show me the steps with explanations to calculate the bond's time to maturity given the a discount bound is bought at a current price of $1000 and it promises to pay $1340 with an interest rate (yield) of 5%.
The duration of a bond is 5.4. The convexity is calculated by a 20-year bond that has an effective yield of 7% and a price of 103.10. If the bond’s yield falls to 6.5% then the price increases to 103.51. If the bond’s yield increase to 7.5% then the price decreases to 102.94. Calculate the estimated new price of the bond if it increases by 50 basis points.
A treasury Bond that settles on October 18 2019 matures on March 30 2038. the coupon rate is 5.30 percent, and the bond has a 4.45 percent yield to maturity. what are the Macaulay duration and modified duration?
If you were to purchase a 12% bond when the market interest rate for such bonds was 11%, would you expect to pay more or less than the face amount for the bond? If you were to purchase a 12% bond when the market interest rate for such bonds was 13%, would you expect to pay more or less than the face amount for the bond? Explain your answers from above?
If the annual interest rate printed on the face of a bond is 10 percent, the face value of the bond is $1,000, and you purchase the bond for $1,250, what is the current yield on the bond? O A. 5 percent. O B. 6 percent. OC. 12.5 percent. O D.8 percent.
Suppose the current YTM on a 5-year T-Bond is 2.8% and the current YTM for a 1-year T-Bond is 0.75%. What is the 5-year term premium if the expected 1-year rates for thenext 4 years are 1.25%, 1.75%, 2.5%, and 3.25%?
Bond X is a premium bond making semiannual payments. The bond pays a coupon rate of 7 percent, has a YTM of 5 percent, and has 13 years to maturity. Bond Y is a discount bond making semiannual payments. This bond pays a coupon rate of 5 percent, has a YTM of 7 percent, and also has 13 years to maturity. The bonds have a $1,000 par value. What is the price of each bond today? If interest rates remain unchanged, what do you expect the price of these bonds to be one year from now? In four years? In nine years? In 11 years? In 13 years?
If the real rate of interest is 2%, inflation is expected to be 3% during the coming year, and the default risk premium, illiquidity risk premium, and maturity risk premium for the Bonds-R-Us Corporation are all 1% each, what would be the yield (stated rate) on a Bonds-R-Us bond?
A fixed-income analyst, Sean, observes a 7-year, 8% semiannual-pay bond. the face amount is ¥1,000. He believes that the yield-to-maturity (YTM) on a semiannual bond basis should be 12.29%. Based on this yield estimate, the price of this bond would be A. ¥942.73. B. ¥900.89. C. ¥828.39. D. ¥802.40.

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