D Question 3Which 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

Bonds means an instrument issued by company acknowledging the debt due from company to bond holder.…

Answered: Question 3 Which of the following…

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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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.
If a callable bond is trading at a premium, what yield measure is most appropriate? a) dividend yield b) yield to maturity c) yield to infinity d) yield to call e) none of the above
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.
A4)
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.
1.If the coupon rate is less than the market rate, the bond will be a: Group of answer choices A. premium bond B. discount bond C. at par bond 2.If the coupon rate is greater than the market rate, the bond will be a: A. premium bond B. discount bond C. at par bond 3. If the price of the bond is greater than the par value, then the bond is a: A. premium bond B. discount bond C. at par bond 4.Company X is issuing bonds. They plan to issue 10,000, $1000 par, 7% bonds that pay semi-annual for 5 years. If the price per bond is $1020, what is the market annual rate-of-return? (percentage, 2 decimals, e.g. xx.xx)
Question 23 As bond maturity increases, the bond's risk: O A. B. C. D. E. Increases Decreases Does not change Sometimes increases and sometimes decreases Is inversely related to the value of the bond
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? O The bond will not be called. O The bond has an early redemption feature. 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 $1,040.35. 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 YTC If interest rates are expected to remain constant, what is the best estimate of the remaining life left for Demed Inc.'s bonds? O 18 years O 5…
If a bond's yield to maturity increases, then what happens to current yield? Group of answer choices Not enough information No change Decrease Increase
[S1] Prices of existing bonds move upward as marketinterest rates move downward. [S2] Assuming the samenominal interest rate, the investment with the higher riskwill have a higher value.
Question 13 Which of the following statements is true? O Discount yield is always lower than bond equivalent yield on the same security. O Discount yield is always higher than bond equivalent yield on the same security. Discount yield is always equal to bond equivalent yield on the same security. O Discount yield can be lower or higher than bond equivalent yield on the same security.
1. (T/F) A putable bond will have a higher coupon than a bond without a put option, assuming both have the same maturity and risk profile

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