Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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the YTM is the annual return that an investor earns on a bond of the investor purchases the bond today and sells it before maturity
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- What would be the value of this bond if it paid interest semiannually? was missed ?arrow_forwardHow can the behavior of market interest rates and bond returns over the past 50 years be described? Do swings in market interest rates have any bearing on bond returns?arrow_forwardBonds pay the face value to the investor when they are a. held over 10 years. b. held 20 years. c. held until maturity. d. sold on the market before maturity.arrow_forward
- From page 9-2 of the VLN, how do you determine the annuity cash flow (the bond interest payment) from an annual bond? Group of answer choices A. Bond payable x stated rate B. Bond liability x stated rate C. Bond payable x market rate D. Bond liability x market ratearrow_forwardA bond's yield to maturity is the annualized percentage return of both interest and capital gains or losses if the bond were held until it matured. Select one: True Falsearrow_forwardWhat is the total cost of borrowing over the life of the bond? (Round answer to 0 decimal places, e.g. - Total cost of borrowing over the life of the bond $ Save for Later Attempts lipiarrow_forward
- What is the yield to maturity on a bond that has a price of $1,600 and pays $100 interest annually for 6 years at the end of which it repays the principal of $1000? Is the bond selling at premium, at par, or at discount? How can you tell?arrow_forward23. The bond issue price is determined by calculating the a.future value of the stream of interest payments and the future value of the maturity amount. b.present value of the stream of interest payments and the present value of the maturity amount. c.future value of the stream of interest payments and the present value of the maturity amount. d.present value of the stream of interest payments and the future value of the maturity amount.arrow_forwardA bond with 12 years to maturity has an annual interest payment of $65. If the bond sells for its par value, what are the bond's current yield and yield to maturity? Round your answers to two decimal places. CY: ....% YTM: .....%arrow_forward
- Why will bonds always sell at their price plus any interest that has accrued since the last interest date?arrow_forwardFor a standard corporate bond, when are the following characteristics of the bond determined? ······ The amount that the issuer returns to the bondholder, when the bond matures. The maturity date. The bond's market yield. The bond's market price. The price that the bondholder pays to the issuer to acquire the bond. The amounts of any interest payments. The bond's coupon rate. The dates of any interest payments. 1. 2. Fixed before the bonds are sold and does not change. Fixed when the bonds are sold and does not change. 3. Fluctuates continually.arrow_forwardIf you were to purchase a bond for $1,100 that paid $50 per year in dividends, what will be the current yield of your bond?arrow_forward
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