What will be the price of a bond in which the YTM is higher than the coupon rate? a. Below face value b. At face value c. Above face value d. Cannot be determined
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What will be the price of a bond in which the YTM is higher than the coupon rate?
a. Below face value
b. At face value
c. Above face value
d. Cannot be determined
Step by step
Solved in 2 steps
- a. Explain the difference between a bond’s coupon,and itsyield to maturity.b. Describe a zero-couponbond7. 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.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
- b. How is the duration of a bond affected by the amount of its coupon, when its other characteristics remain constant? (Hint: Answer without acting).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 yieldWhat is the difference between a bond's coupon rate and its required return?
- What is the relationship between the yield to maturity and the price of a bond? They are negatively related They are positively related There is no relation O The relation is indeterminantDescribe the differences between the yield to maturity (YTM) and the yield to call (YTC) on a bond. Why would the return to the investor be different if a bond is called? Justify your answer1. A bond call price amount is a. lower than the par value b. higher than the par value c. lower than the discount value 2. Risk of losing a market due to forex change. a. economic risk b. market risk c. transaction risk
- D3) Show that a variable rate bond is priced at par if the coupons are paid with reference to the rate curve with which the flows are discounted.The coupon rate is calculated on the bond's face value (or par value), not on the issue price or market value. Choices: true or falseDoes it make any difference if the coupon rate on a bond is more than the needed rate of return on the bond, as long as the required rate of return is greater than the coupon rate? Explain.