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- A zero coupon bond has more interest rate risk than a comparable coupon bond. true or falseZero-coupon bonds has higher yield than otherwise identical coupon paying bonds. Select one: True FalseA bond with short maturity has less "interest rate risk" than a bond with long maturity when all other features—coupon interest rate, par value, and interest payment frequency—are the same. TRUE FALSE
- 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 profileUnder what conditions will a discount bond have anegative nominal interest rate? Is it possible for a coupon bond or a perpetuity to have a negative nominalinterest rate?A bond will be priced at a discount to par value if its coupon rate is less than its yield-to-maturity (YTM). Select one: True False
- The difference in yield between a credit-risky bond and a credit-risk-free bond of similar maturity is called its yield spread. Select one: True False2. 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.Which of the following statements is false? A. Other things being equal, an increase in a bond’s maturity will increase its interest rate risk. B. Other things being equal, an increase in the coupon rate of a bond will decrease its interest rate risk. C. Other things being equal, an increase in a bond’s YTM will decrease its interest rate risk. D. Effective duration is calculated as Macaulay duration divided by one plus the bond’s yield to maturity.
- 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?Please explain why this statement is (False). Ignoring default risk, if a bond's expected return is greater than its required return, then the bond's market price must be greater than the present value of the bond's cash flows.If a bond sells for its par value, the coupon interest rate and yield to maturity are equal. True False *