Since bonds always come with a coupon rate, why is it still important to check the yield to maturity when deciding to invest in a bond?

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: 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: Define the word "bond price elasticity." Would the elasticity of bond prices suggest that…

A: Introduction: Bond price elasticity refers to the degree to which a bond's price is sensitive to…

Q: Interest-rate risk results from:   a. Bond prices being fixed over the life of the bond b. Inflation…

A: Interest rate risk refers to the sensitivity of the bond prices to the interest rate changes. There…

Q: Why is yield to maturity more important than coupon rate when it comes to bonds?

A: The Yield to maturity refers to the return that one can expect if a thing is kept till its maturity.…

Q: When it comes to bonds, why is yield to maturity more essential than coupon rate?

A: Yield to Maturity, or YTM, is a discount rate that provides discounted future coupons and redemption…

Q: What does the coupon rate on a bond represent? What range of S&P credit ratings do investment grade…

A: Introduction : Bond coupon rates may be described as the amount of interest income given to…

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: Why is it an interest rate risk when investing in long-term bonds?

A: Long-term bonds are those bonds that have the longest maturity offering from U.S. Treasury.…

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: Describe the relationship between bond prices and inclation. would you be more inclined to buy bonds…

A: Bond prices have an inverse relation o interest rates. When the interest rates increase, the bond…

Q: Please explain why this statement is (False).  Ignoring default risk, if a bond's expected return…

A: The expected return is the return from an investment that the market expects based on the bond's…

Q: Give a definition for the term "bond price elasticity." Would the price elasticity of bonds imply…

A: Introduction: Securities such as bonds are debt obligations issued by firms, securitized as…

Q: Briefly describe why investors should buy high-quality (non-speculative) bonds based on…

A: Bonds are fixed income instruments and are rated according to their risk of default by independent…

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

A: Interest rate is the rate that is prevailing in the market on which you can invest your money. Fixed…

Q: Why is it important to know the interest rate risk when investing in bonds? Does interest rate risk…

A: Interest rate risk is the risk that the bond investment reduces in value which results from changes…

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: In today’s low interest rate environment and economic uncertainty, what bond duration strategy would…

A: Bond portfolio management strategies can help investors get the most of their portfolio, by actively…

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: nterest rate risk refers to changes in the bond's     ______________ (coupon rate, credit rating,…

A: Interest rate risk refers to the potential loss in the value of a bond or bond portfolio due to…

Q: If we were to keep a bond until maturity, would interest rate risk still matter? and why?

A: Bond Risk refers to various risks that are specifically associated with investment in bonds for…

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: 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: Suppose you are managing a bond portfolio for liquidity that is heavily invested in Treasury bonds.…

A: We have to assess the impact of interest rate decline on the liquidity embedded in the bond…

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…

Q: Why is the yield of bonds with credit risk higher than that of otherwise identical default-free…

A: The question is based on the concept of calculation of yield to maturity in bond investment , the…

Q: a rise in risk premium will cause bond market prices to rise? true or false?

A: A risk premium is the additional return an investor expects to earn for taking on more risk compared…

Q: What is the convexity of a coupon bond? Why do investors tend to have a positive view of convexity?

A: Convexity is an indicator of the skewed relationship between bond prices with yields. Convexity…

Q: t is the interest rate that the buyer will actually earn if the bond is held to maturity and there…

A: Bonds are the debt obligations of a business on which it requires to pay regular interest to the…

Q: An increase in which factors increases the interest rate sensitivity (duration) of a bond? Check…

A: Bonds payable is a form of liability being incurred in business. It can be long term bonds or short…

Q: A bond’s expected return is sometimes estimated by its YTM and sometimes by its YTC. Underwhat…

A: Yield to Maturity (YTM) is the total return for the bond from the time of purchase till its…

Q: zero-coupon bonds or high-coupon bonds that are offering the same yield to maturity?

A: Bond price elasticity means sensitivity of a bond price to changes market interets rate. Zero coupon…