ECO 2020 INCLUSIVE ACCESS
21st Edition
ISBN: 9781260564617
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 36, Problem 2P
To determine
Relation of Bond Price and the Interest yield.
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Students have asked these similar questions
O If the market interest rate (i) increases today, the Price of a Bond (P) today will
decline.
The following are correct statements about the impact of Market Interest Rate (i*) on
value and return of a typical Coupon Bond, EXCEPT:
The YTM of a Bond and the Market Interest Rate (i*) are the same value, even in
the Short Term.
O For a long term bond, if the Market Interest rate (i*) is expected to increase, the
current Price of such Bond will Decline.
For a two period Bond, if the Market Interest rate (i*) is expected to increase in
the next period, the Expected Total Return (RET) on such bond will decline.
Long Term Bonds are considered more risky than Short Term bonds, in part due
to the risk associated to changes in future interest rates.
Question 38
Long-term bonds are generally
I
less risky than short-term bonds and so pay higher interest.
less risky than short-term bonds and so pay lower interest.
more risky than short-term bonds and so pay higher interest.
more risky than short-term bonds and so pay lower interest.
Question 39
On which bond is default most likely?
P Type here to search
40
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%23
LO
A coupon bond will make 20 annual coupon payments of $5,000 each and will pay a face value of
$100,000 at the end of the twenty years. Currently this bond is selling for $75,000. What is the yield
to maturity of this bond?
O 5.0 percent
O Lower than 5.0 percent
O Higher than 5.0 percent.
Chapter 36 Solutions
ECO 2020 INCLUSIVE ACCESS
Ch. 36.1 - Prob. 1QQCh. 36.1 - Prob. 2QQCh. 36.1 - Prob. 3QQCh. 36.1 - Prob. 4QQCh. 36.4 - Prob. 1QQCh. 36.4 - Prob. 2QQCh. 36.4 - Prob. 3QQCh. 36.4 - Prob. 4QQCh. 36.5 - Prob. 1QQCh. 36.5 - Prob. 2QQ
Ch. 36.5 - Prob. 3QQCh. 36.5 - Prob. 4QQCh. 36 - Prob. 1DQCh. 36 - Prob. 2DQCh. 36 - Prob. 3DQCh. 36 - Prob. 4DQCh. 36 - Prob. 5DQCh. 36 - Prob. 6DQCh. 36 - Prob. 7DQCh. 36 - Prob. 8DQCh. 36 - Prob. 1RQCh. 36 - Prob. 2RQCh. 36 - Prob. 3RQCh. 36 - Prob. 4RQCh. 36 - Prob. 5RQCh. 36 - Prob. 6RQCh. 36 - Prob. 7RQCh. 36 - Prob. 8RQCh. 36 - Prob. 9RQCh. 36 - Prob. 1PCh. 36 - Prob. 2PCh. 36 - Prob. 3PCh. 36 - Prob. 4PCh. 36 - Prob. 5PCh. 36 - Prob. 6PCh. 36 - Prob. 7P
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