Which of the following statements is/are most CORRECT? a. A yield curve depicts the relationship between bond's time to maturity and its price b. A premium band's price will decline over time if the required return remains unchanged A discount bond's price will increase over time if the required return remains unchanged. d. Both a and b are correct. e. Both b and c are correct Which of the following statements is the most INCORRECT? 6 a. All else equal, secured debt has a lower coupon rate than debenture. b. All else equal, a bond with a sinking bond has higher default risk. c. Registered form and semi-annual payments are commonly associated with corporate bonds issued in the U.S. d. A bond is sold at par when YTM equals coupon rate. else equal, a firm will have to pay a higher coupon rate on its subordinated than on its mortgage bonds. for $1,111. They their yiel

Which of the following is TRUE concerning the distinction between interest rates and returns? Select one: a. The rate of return will be greater than the interest rate when the price of the bond falls during the holding period. b. The return can be expressed as the difference between the current yield and the rate of capital gains. c. The rate of return on a bond will not necessarily equal the interest rate on that bond. d. The return can be expressed as the sum of the discount yield and the rate of capital gains

Which of the following statements are most likely to be true? 1. The only factor that has an impact on a bond's price is its yield to maturity. II. Bond prices and market interest rates move in the opposite direction. III. As time passes and a bond approaches its maturity date, its (ex-coupon) price will converge to its face value. Group of answer choices I and Il only. I and III only. Il and III only. I, Il and II. 3) A company has a bank loan outstanding that requires it to make annual payments of $1,000,000 at the end of each of the next three years. The bank has offered to the company to skip the next two payments and instead make a single payment at the end of the loan's term in three years' time. If the interest rate on the loan is 6% p.a., compounded quarterly, the final payment that will make the company indifferent between the two payment options is closest to: Group of answer choices $2,666,283. $2,673,012. $3,183,600. $3,187,856. 2)

Identify a problem associated with using the Black-Ścholes model to value bond options. а. It assumes short-term interest rates are constant. b. It assumes that commissions are charged. С. It assumes fluctuating variance of returns on the underlying asset. d. It assumes that the variance of bond prices is nonconstant over time. е. All of the above.

Duration is a measurement of a bond’s interest rate risk. It is also referred to as the responsiveness or sensitivity of a bond’s full price to a change in its yield.   Select one: True False

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.

A bond’s expected return is sometimes estimated by its YTM and sometimes by its YTC. Underwhat conditions would the YTM provide a better estimate, and when would the YTC be better?

do you predict will happen the market equilibrium price of bonds if the yield to maturity on bonds is expected to decrease, all else remaining constant? a. Your graph should support your statement.

7. Explain in detail, in terms of current yield, capital gain yields and YTM, why: a) If YTM = coupon rate, bond price = par value? b) If YTM > coupon rate, then bond price < par value? c) IF YTM < coupon rate, then bond price > par value? AND also give the name of the bond in each scenario.

The inverted yield curve predicts that bond prices will fall. Select one: True OR False