H3. Please explain with details both questions and also explain wrong options Question 3 A bond is a premium bond. B bond is a disount bond. Both bonds have a yield to maturity of 6%. Which bond should have the higher holding period return over the next year? A B they should have the same holding period return. not enough information to determine Question 4 Bond A is a discount bond. Bond B is a premium bond. If yields remain constant, which bond's price should rise as it matures? A B prices of both A and B should rise as it matures not enough information to determine

H3. Please explain with details both questions and also explain wrong options Question 3 A bond is a premium bond. B bond is a disount bond. Both bonds have a yield to maturity of 6%. Which bond should have the higher holding period return over the next year? A B they should have the same holding period return. not enough information to determine Question 4 Bond A is a discount bond. Bond B is a premium bond. If yields remain constant, which bond's price should rise as it matures? A B prices of both A and B should rise as it matures not enough information to determine

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter11: Bond Pricing And Amortization (bonds)

Section: Chapter Questions

Problem 3R

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Question 4

Bond A is a discount bond. Bond B is a premium bond. If yields remain constant, which bond's price should rise as it matures?

		A
		B
		prices of both A and B should rise as it matures
		not enough information to determine

Definition Definition Calculates the present value of a bond's expected future periodic coupon payments. Bond valuation determines the theoretical fair value of a particular bond and helps investors estimate what rate of return they could expect. The bond's theoretical fair value is computed by discounting the future cash flows or coupon payments by an applicable discount rate.

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