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

Q: What does a bond’s coupon rate refer to? Investment grade bonds have what range of S&P credit…

A: Bond's coupon rate refers to interest paid to the issuers on the bond's face value.

Q: What impact do interest rates have on bond prices? What are the basic assumptions that go into…

A: This question explains about the fundamental assumptions that go into establishing the value of a…

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: How do I calculate the market price of a bond?

A: Market price of a bond is the present value of future cashflows.

Q: Explain why the dirty price of a bond might fall sharply before the next coupon is paid?

A: Dirty price of bond include clean price plus accrued interest.

Q: Why is the required rate of return on a bond different than the copoun rate

A: Bonds are the debt securities which are issued by the corporates or the government to raise the…

Q: Describe in detail the key features of a bon value, maturity, coupon rate, coupon, yield maturity,…

A: Bonds are debt instruments that carry the interest payments to be paid each period and face value on…

Q: if a coupon bond are selling at a discount then?

A: Solution: If a coupon bond are selling at a discount then it means market interest rate of similar…

Q: What does "bond price elasticity" mean? How does the price elasticity of bonds compare to the yield…

A: The bond price elasticity is a measure which shows the percentage change in the price of the bond…

Q: How do interest rates affect bond valuations? What are the key assumptions in valuing a bond?

A: Bonds are the form of debt payable by the company. Interest rates on bonds to be paid is coupon…

Q: Which is the relationship between the price and the implicit rate of return of a bond?

A: When a company issues a bond, it asks the investor for a loan, i.e. you're lending the bond issuer…

Q: What exactly does the coupon rate on a bond relate to? What range of S&P credit ratings are assigned…

A: Answer are as follows

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: Is Treasury Bond Yield, the risk free rate?   Yes or No. Explain.

A: Introduction: Risk free rate is nothing but an investment’s return rate with no chance of loss. The…

Q: Which of the following is FALSE?   A bond is trading at par if its coupon rate equals interest…

A: The price of the bond depends on the interest rates and the coupon rate. The relationship is…

Q: What effect do interest rates have on bond prices? What are the fundamental assumptions that go into…

A: SOLUTION-   A BOND REPRESENTS A PROMISE BY A BORROWER TO PAY A LENDER THEIR PRINCIPLE AND USUALLY…

Q: What effect do interest rates have on bond prices? What are the essential assumptions behind bond…

A: Introduction: Bonds are a kind of debt that the firm must repay. The term "coupon interest" refers…

Q: How does bond duration and bond convexity complement each other in measuring a bond portfolio’s…

A: Interest rate risk-It is the risk that arises for the bondholders from a volatile interest rate term…

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: Which of the following is correct? a. The YTM of a bond is its IRR b. Call premium rises as a bond…

A: YTM of bond is the rate of return that the bondholder will get if they hold bond till maturity and…

Q: What is the market rate on a bond?

A: Definition:   Bonds: Bonds are a kind of interest-bearing notes payable, usually issued by…

Q: What impact do interest rates have on bond prices? What are the fundamental assumptions that go into…

A: SOLUTION-   A BOND IS LOAN FROM AN INVESTOR TO A BORROWER SUCH AS A COMPANY OR GOVERNMENT .THE…

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: a bonds interest rate risk is lower if the bond has a _____ maturity and a ____ coupon rate

A:

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: f a bond’s coupon rate is greater than the investor’s required rate of return on the bond, would the…

A: Prices of bond depend on required rate of return on the bond and the prices of bond changes with…

Q: Why does the market value differ from its par value when the coupon interest rate does not equal the…

A: Par Value is the denominated value of bond which is used for coupon calculation whereas market price…

Q: What is a bond spread and how is it related tothe default risk premium? How are bond ratingsrelated…

A: Bond spread: It is the difference between the yields of two bonds.

Q: What is the difference between a bond's coupon rate and its current market interest rate?

A: Bond's coupon rate is the cash interest rate that the bond is actually providing to the bond holders…

Q: What is the relationship between bond prices and interest rates?  Verbally describe how this…

A: Bonds are long-term debt instruments which are issued by government and large corporate houses for…

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

A: Bonds are issued by the company to meet the financial requirements of the company without losing its…

Q: What happens when a bond's market rate is less than the stated rate?

A:

Q: What is the total rate of return on the bond?

A: Bonds are issued by various entities like corporates, municipal corporations, and governments of the…

Q: Discuss how does the length of time until maturity for a bond influence the relationship between…

A: Following are some relationships between the bond prices, interest rates, and bonds time to…

Q: A bond’s coupon rate is more than the interest rate, therefore the bond is selling at a

A: BOND COUPON RATE-       Coupon rate is that the rate of interest paid by bond issuers on the bond's…

Q: When it comes to bond values, what role do interest rates play? How can you value a bond if you…

A: Introduction: Bonds are a kind of debt owed by the corporation that must be paid back. Coupon…

Q: how will the modified duretion of a floating coupon bond be compared to the modified duration of a…

A: A bond is a financial product that represents a loan that an investor makes to a borrower (usually a…

Q: what happens to the bond prices when interest rate falls?

A: At the point when interest rates increase, the bond price downfall, and bond costs ascend as loan…

Q: why is yield to maturity more important than coupon rate when investing in bonds?

A: Yield to Maturity or YTM can be defined as a discount rate which provides for discounted value of…

Q: What is the relationship between interest rate level and bond price? Why must this relationship be…

A: Bonds are a type of long-term debt often offered by government and corporations to raise loan.