t is the interest rate that the buyer will actually earn if the bond is held to maturity and there is no default. A. yield to maturity B. no choice given c. current yield d. coupon discount rate e. coupon payment ra
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It is the interest rate that the buyer will actually earn if the bond is held to maturity and there is no default.
A. yield to maturity
B. no choice given
c. current yield
d. coupon discount rate
e. coupon payment rate
Step by step
Solved in 3 steps
- The method used to value a default-free zero coupon bonds (such as T-bills) requires that the interest is deducted from the face value of the bonds in advance. a.rediscounting b.market price c.forward price d.discount interesthe yield that a bond will earn given that it is bought back by the issuer at the earliest possible date is the: Select one: a. current yield b. yield to maturity c. yield to put d. market yield e. yield to callThe formula for the yield to maturity, i, on a discount bond is (Points : 1)i = (Face value – Discount price)/Discount price.i = (Discount price – Face value)/Discount price.i = (Face value – Discount price)/Face value.i = (Discount price – Face value)/Face value
- 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.Changes in yield-to-maturity (YTM) produce market price risk and reinvestment risk. A __________ in yield-to-maturity (YTM) increases a bond’s price and __________ its reinvestment risk. A. decrease / decrease B. decrease / increase C. increase / increase D. increase / decreaseK Bonds are priced in the market so that their A. stated rate B. yield OC. discount OD. par value is the same as the market rate of interest.
- 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.h. A bondholder with a short-term bond is exposed to ___________ interest rate risk thanwhen owing a long-term bond.i. When interest rates __________, the market required rates of return ________, and thebond prices will ________.j. If interest rates increase after a bond issue, the yield-to-maturity will ______,which of the below does not qualify a bond ? a. Time to maturity b. Par Value c. Coupon rate d. Yield to Maturity e. Current yield
- 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.the par value. When the is higher than the coupon rate, the bond sells at a O a. time to maturity; premium over O b. time to maturity; discount to Oc yield to maturity; premium over O d. yield to maturity; discount to CONTACT US 2 Type here to search WFor 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
