Answered: Concerning a corporate bond, which of…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 3Q: The rate of return on a bond held to its maturity date is called the bonds yield to maturity. If...

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13. Concerning a corporate bond, which of the following features can change over time?
a. Bond Price.
b. Par value.
c. How frequently coupon payments are made.
d. Date the bond matures.
e. Coupon rate.
14. Which one of the following statements is TRUE?
a. Holding everything else constant, as the bond’s yield to maturity increases, bond price does not change.
b. Holding everything else constant, as the bond’s yield to maturity increases, bond price decreases.
c. Holding everything else constant, coupon rate increases, bond price decreases.
d. Holding everything else constant, coupon rate increases, bond price does not change.
e. None is correct.
15. If Martin observes that the risk-free rate is 1% and the market return is 9% then, according to the Capital Asset
Pricing Model (CAPM), he knows that for a stock with a beta of 1.1, the required rate of return will be
______%.
a. 8.2
b. 9.8
c. 11.4
d. 13.0
e. 14.6

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