Question

iven your computation and conclusions, which of the following statements is true?

A) When the coupon rate is greater than Noah’s required return, the bond should trade at a premium.

B) When the coupon rate is greater than Noah’s required return, the bond’s intrinsic value will be less than its par value.

C) When the coupon rate is greater than Noah’s required return, the bond should trade at a discount.

D) A bond should trade at a par when the coupon rate is greater than Noah’s required return.

Answer #1

The process of bond valuation is based on the fundamental
concept that the current price of a security can be determined by
calculating the present value of the cash flows that the security
will generate in the future. There is a consistent and predictable
relationship between a bond’s coupon rate, its par value, a
bondholder’s required return, and the bond’s resulting intrinsic
value. Trading at a discount, trading at a premium, and trading at
par refer to particular relationships between...

Which of the following statements is incorrect?
a. If the coupon rate of a bond is below the investor's
required rate of return, the present value of the bond should be
above the par value.
b. If the coupon rate of a bond is above the investor's
required rate of return, the present value of the bond should be
above the par value.
c. If the coupon rate of a bond is below the investor's
required rate of return, the...

Which one of the following statements is true? Question 13
options: 1) A premium bond has a yield to maturity that is less
than the bond's coupon rate. 2) A discount bond has a coupon rate
that is higher than the bond's yield to maturity. 3) The yield to
maturity on a premium bond exceeds the bond's coupon rate. 4) The
current yield on a par value bond will exceed the bond's yield to
maturity. 5) The current yield on...

1) Which of the following statements is
correct?
a) If a bond is at a discount, the coupon rate is less than the
current yield, which is less than YTM.
b) Current yield is the ratio of annual coupon payment divided
by the par value.
c) When the coupon rate is higher than the market rate, the bond
is priced at a discount.
d) When the market rate is higher than the coupon rate, the bond
is priced at a...

Please answer Questions 4 and 12 on page 89 of the textbook, and
solve Problems 22 and 27 on page 91 of the textbook. Complete your
answer in Word, Excel, or both.
4. For each of the following situations, identify whether a bond
would be considered a premium bond, a discount bond, or a par
bond.
A bond’s current market price is greater than its face
value.
A bond’s coupon rate is equal to its yield to maturity.
A bond’s...

Which one of the following statements is
TRUE?
Group of answer choices
When the required return is less than the internal rate of
return, net present value is positive.
When the IRR is greater than the required return, the net
present value is negative.
If projects are mutually exclusive, you should always select the
project with the greatest IRR.
Projects with conventional cash flows have multiple internal
rates of return.

A 10-year bond with a 8% annual coupon has a yield to maturity
of 9%. Which of the following statements is CORRECT?
a. The bond’s current yield is greater than 9%.
b. If the yield to maturity remains constant, the bond’s price
one year from now will be higher than its current price.
c. The bond is selling above its par value.
d. If the yield to maturity remains constant, the bond’s price
one year from now will be lower...

When a bond's price is greater than its par value, we say the
bond is selling ____________.
This occurs when YTM is ___________ the coupon rate.
Group of answer choices
at a premium; less than
at a discount; less than
at a discount; greater than
at a premium; greater than

A bond has an 8 percent annual coupon and a yield to maturity
equal to 7.5 percent. Which of the following statements is most
correct?
a. If the yield to maturity remains constant, the price of the
bond is expected to increase over time.
b. The bond has a current yield greater than 8 percent.
c. If the bond is callable, the YTM is a better estimate of this
bond’s expected return.
d. The bond price will decrease when there...

Suppose a seven-year, $1,000 bond with a 7.6% coupon rate and
semiannual coupons is trading with a yield to maturity of
6.54%.
a. Is this bond currently trading at a discount, at par, or at
a premium? Explain.
b. If the yield to maturity of the bond rises to 7.33% (APR with
semiannual compounding), what price will the bond trade for?
a. Is this bond currently trading at a discount, at par, or at
a premium? Explain. (Select the best...

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