Which one of the following statements is true regarding bond valuation? a. When yield to maturity is higher than coupon rate, the bond is called a premium bond b. When yield to maturity is higher than coupon rate, the bond is traded at par c. When yield to maturity is less than coupon rate, the bond is called a discount bond d. When yield to maturity is higher than coupon rate, the bond is called a discount bond e. When yield to maturity is equal to coupon rate, the bond is called a premium bond

Which one of the following statements is true regarding bond valuation? a. When yield to maturity is higher than coupon rate, the bond is called a premium bond b. When yield to maturity is higher than coupon rate, the bond is traded at par c. When yield to maturity is less than coupon rate, the bond is called a discount bond d. When yield to maturity is higher than coupon rate, the bond is called a discount bond e. When yield to maturity is equal to coupon rate, the bond is called a premium bond

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 9QTD

See similar textbooks

Similar questions

Which of the following is TRUE about a bond's face (par) value? Select one: a. the face value of a bond is the same as the bond's price b. the par value of a bond is the interest payment c. the face value of a bond changes when yields change d. the value of a bond will always be equal to par at maturity.
Evaluate the following statement:The Yield-to-Maturity (YTM) of a par bond is higher than that of a discount bond.
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.
a) All things being equal If a bond's coupon rate is higher than its yieldto maturity (YTM), is the bond selling at a discount, premium or par?b) All things being equal If a bond's coupon rate is lower than its yield tomaturity (YTM), is the bond selling at a discount, premium or par?c) All things being equal If a bond's coupon rate is equal to its yield tomaturity (YTM), then is the bond selling at a discount, premium or par?d) All else being equal, the longer the term to maturity, the greater orthe lower the duration?f) All else being equal, the higher the coupon rate on the bond, theshorter or the longer the duration of the bond?
The 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.
To calculate the price of a coupon bond, the following information is required: Select one: O A. Face value of the bond, yield to maturity rate, maturity date and inflation rate. O B. Face value of the bond, yield to maturity rate, maturity date, coupon rate and inflation. O C. Face value of the bond, inflation rate, coupon rate and coupon rate. O D. Face value of the bond, yield to maturity rate, maturity date and coupon rate.
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 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.
Which of the following bonds has the least reinvestment risk?A. A bond that has a higher coupon rate than the yield-to-maturityB. A bond that has a lower coupon rate than the yield-to-maturityC. A zero-coupon bond
Bond A is a par bond and Bond B is a premium bond. All else equal, which bond has the lower coupon rate? Select one: a. B b. A=B c. A
The yield to maturity on bonds is usually the same as a. yield to call. b. current yield. c. the market rate of interest. d. the coupon rate of interest.
For 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 than