finance test 2 chap 7

zero coupon A bond that has only one payment, which occurs at maturity, defines which one of the following?
II premium priceandIV yield-to-maturity that is less than the coupon rate only A bond has a market price that exceeds its face value. Which of the following features currently apply to this bond?I. discounted priceII. premium priceIII. yield-to-maturity that exceeds the coupon rateIV. yield-to-maturity that is less than the coupon rate
a discount; less than All else constant, a bond will sell at _____ when the coupon rate is _____ the yield to maturity.
decrease the market price The Walthers Company has a semi-annual coupon bond outstanding. An increase in the market rate of interest will have which one of the following effects on this bond?
II coupon rate > yield-to-maturity and IV coupon rate > current yield only Which of the following are characteristics of a premium bond?I. coupon rate yield-to-maturityIII. coupon rate current yield
II current yield = yield-to-maturityand IV market price = face valueonly Which of the following relationships apply to a par value bond?I. coupon rate < yield-to-maturityII. current yield = yield-to-maturityIII. market price = call priceIV. market price = face value
Decreasing the time to maturity increases the price of a discount bond, all else constant. Which one of the following relationships is stated correctly?The coupon rate exceeds the current yield when a bond sells at a discount.The call price must equal the par value.An increase in market rates increases the market price of a bond.Decreasing the time to maturity increases the price of a discount bond, all else constant.Increasing the coupon rate decreases the current yield, all else constant.
I increase in time to maturityand IV decrease in coupon rateonly Which of the following increase the price sensitivity of a bond to changes in interest rates?I. increase in time to maturityII. decrease in time to maturityIII. increase in coupon rateIV. decrease in coupon rate
3-year; 6 percent coupon, lesser years, higher coupon Which one of the following bonds is the least sensitive to interest rate risk?
You will realize a capital gain on the bond if you sell it today. You own a bond that has a 6 percent annual coupon and matures 5 years from now. You purchased this 10-year bond at par value when it was originally issued. Which one of the following statements applies to this bond if the relevant market interest rate is now 5.8 percent?
long-term; zero coupon You expect interest rates to decline in the near future even though the bond market is not indicating any sign of this change. Which one of the following bonds should you purchase now to maximize your gains if the rate decline does occur?
The yield-to-maturity is less than the coupon rate. A 6 percent, annual coupon bond is currently selling at a premium and matures in 7 years. The bond was originally issued 3 years ago at par. Which one of the following statements is accurate in respect to this bond today?
are considered to be free of default risk. Bonds issued by the U.S. government:
pay interest that is federally tax-free. Municipal bonds:

Leave a Reply

Your email address will not be published. Required fields are marked *