An option free bond’s value/price has an inverse relationship with interest rates/yield. If yields increase, the value of a bond decreases

Q: What is the connection between the interest rate and the price of a fixed coupon bond? Why is this…

A: The cost of bonds issued is attractive. Interest is paid at predetermined intervals. Bondholders are…

Q: If a coupon-paying bond is selling at a discount, the bond's yield to maturity will be _______ than…

A: A coupon-paying bond is a type of debt security that makes regular interest payments to its…

Q: an investment in a coupon bond will provide the investor with a return equal to the bond's yield to…

A: The objective of the question is to understand the conditions under which an investment in a coupon…

Q: Given that market interest rates is higher then bond's coupon rate, the bond will: sell for less…

A: The price of bond is sum of present value of the future cash flow from its coupons and the present…

Q: Which of the following is TRUE about a bond's face (par) value? Select one: a. the face value of a…

A: A bond is an instrument of debt issued by a company to raise funds. It carries a fixed rate of…

Q: Describe the relationship between coupon rate and required rate of return that will result in a bond…

A: The question is asking about the relationship between the coupon rate of a bond and the required…

Q: Why does the yield on a discount bond surpass the coupon rate

A: Introduction:The bond will trade at a discount if the yield to maturity (YTM) exceeds the coupon…

Q: A bond that has an embedded put is more valuable at ( higher/lower)Over this region on the…

A: An embedded option is referred to as a feature or provision of fixed-income security which lets…

Q: rve is steeply upward-sloping, short-term interest urve is downward-sloping, short-term interest…

A: The right answer is  option a. When the yield curve is steeply upward-slopping ,short-term interest…

Q: Holding other factors constant, the interest-rate risk of a coupon bond is higher when the bond's:…

A: Term-to-Maturity: Bonds with longer maturities are more sensitive to interest rate changes because…

Q: Which type of bond is likely to pay a coupon payment that is varying (i.e. it changes over time) ? O…

A: Bonds act as long-term debt for the issuer as the issuer is under the obligation to pay regular…

Q: Why does the yield of a bond that trades at a discount exceeds the bond’s coupon rate?

A: Where yield to maturity(YTM) is exceed coupon rate payable on bond, the bond will trade at discount.…

Q: Which of the following bonds has the least reinvestment risk? A. A bond that has a higher coupon…

A: Reinvestment risk is the chance of not being able to reinvest the cash inflows occurring from the…

Q: While comparing two bonds with the same face value, the price is all you need to determine which one…

A: Investment Bonds: Investment bonds are financial securities in which the authorized issuer owes a…

Q: do yo predict will happen the market equilibrium price of bonds if the yield to maturity on be is…

A: Yield to maturity is the rate of return realized on bond when bond is held till the maturity of the…

Q: when the bond price is above par or at a premium?

A: Coupon: Coupon is the annual or semiannual payment will be made by the issuer of the bond to its…

Q: The return on a bond is equal to the yield to maturity when     the holding period is longer than…

A: Explanation: The return on the bond is the return earned for holding the bond.   The yield to…

Q: Changes in yield-to-maturity (YTM) produce market price risk and reinvestment risk. A __________ in…

A: The answer is option B. decrease/increase. A decrease in yield-to-maturity (YTM) increases a bond’s…

Q: If the risk associated with bonds issued by a particular issuer decreases, how will this affect the…

A: The relationship between price and yield are inverse. If yield increased, the price of the bond will…

Q: A bond will be priced at a discount to par value if its coupon rate is less than its…

A: Bond prices have an inverse relationship with interest rates, with the price of the current bond…

Q: When yields change, what characteristics of a bond cause differential percentage price changes for…

A: Bonds have the following relationship between the yield and coupon rate: When the yield to maturity…

Q: The shorter the duration, the greater will be the bond's price vol All of the above are true. The…

A: Duration of bond is the sensitivity of bonds prices to changes in interest rates in the market and…

Q: If you buy a callable bond and interest rates decline, will the value of your bond rise by asmuch as…

A: Bond valuation refers to the evaluation of bond value at any point of time, which can be used for…

Q: A bond has a market price that exceeds its face value. Which one of these features currently applies…

A: The yield to maturity and coupon interest rate are inversely associated, which means that as the…

Q: Which of the following conditions will increase the interest rate risk on a bond? shorter time to…

A: Interest rate risk is referred to as the potential regarding an investment losses due to the change…

Q: Which of the following is NOT true regarding bonds? If a bond is selling at a discount, then the…

A: Bonds are fixed-income assets that serve as a representation of investor loans to borrowers…

Q: The yield curve varies over time based the relative riskiness of buying a single long-term bond…

A: In finance and Bond the yield curve is important area because it deals with the graphical…

Q: The coupon interest rate: O Is larger than the stated interest rate Is the same as the market…

A: Bonds are the obligation on an entity. These are securities which are issued by the entity in order…

Q: Long-term bonds fluctuate more than short-term bonds as interest rates rise, making them a riskier…

A: The Bond is  type of investment which consists of earning a fixed coupon rate. Bond holders…

Q: Does it make any difference if the coupon rate on a bond is more than the needed rate of return on…

A: Introduction: Bond prices are determined by the needed rate of return on the bond, and bond prices…

Q: If interest rates increase, after a bond is issued, the yield to maturity will _____________.

A: The YTM is merely a similar to the return on a bond because coupon payments cannot always be…

Q: Which of the following is correct?   Group of answer choices 1. The lower the price you pay for a…

A: An overpriced bond is one whose price is more than its value. Therefore, 2nd option is incorrect.…

Q: If a bond sells for its par value, the coupon interest rate and yield to maturity are equal. O True…

A: When the market rate of interest is higher than the stated rate of interest, the bond will be issued…

Q: State whether the following statement is True or False and explain why. “A bond’s price is higher…

A: Generally, when the bonds fixed coupon rate is the amount of fixed annual interest paid by the…

Q: The coupon rate is greater than the yield to maturity when a bond sells at a premium. Select one:…

A: A statement connecting coupon rate, yield to maturity and bond's price has been given. We have to…

Q: Explain the differences between a bond's yield to maturity (YTM) and its yield to call (YTC). Is…

A: Introduction: The following are the distinctions between the yield to maturity and the profit to…

Q: Explain how does a bond par value differs from its market value? Are variable rate bonds attractive…

A: 1. The par value is the face value which the borrower is entitled to return to the investor at…

Debenture Valuation

A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.

Note Valuation

It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like: