Question

At what interest rate would you need to earn from an investment in order to accumulate...

At what interest rate would you need to earn from an investment in order to accumulate $17,632 after 5 years if you invest $12,000 now?

Group of answer choices

A. 6%

B. 10%

C. 8%

D.7%

A bond has a market price that exceeds its face value. Which one of these features currently applies to this bond?

Group of answer choices

A. Yield to maturity is lower than the coupon rate

B. Yield to maturity is equal to the coupon rate.

C. Yield to maturity is greater than coupon rate.

D. Discount bond

Bond A and Bond B have 8% coupons, have a $1000 face value, and are priced at par value. Bond A has 3 years to maturity, whereas Bond B has 20 years to maturity.Which of the following statements is true ?

Group of answer choices

A. Bond B has lower price sensitivity to changes in interest rates than Bond A.

B. Both bonds are not exposed to interest rate risk as they have the same coupons.

C. Bond B has greater price sensitivity to changes in interest rates than Bond A.

D. Bond B has lower default risk than Bond A

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Question 1 In terms of bonds, what is “reinvestment risk”? a) Change in price due to...
Question 1 In terms of bonds, what is “reinvestment risk”? a) Change in price due to changes in interest rates. b) Risk of investing funds in debt of questionable credit quality. c) Uncertainty concerning rates at which cash flows can be reinvested. d) None of the above. Question 2 If yield-to-maturity (YTM) is greater than the coupon rate (CPN) of a bond, then the bond price will be: a) Greater than par or face value. b) Less than par or...
14. Which of the following statements is true? a. If you earn simple interest then you...
14. Which of the following statements is true? a. If you earn simple interest then you earn interest on the original amount of principal and interest received b. The present value of an annuity represents an infinite series of equal payments c. If you earn compound interest then you earn interest on the original amount of principal and interest received d. The present value of a perpetuity represents a finite series of equal payments 19. A bond has a market...
Which of the following bonds has a price that is less sensitive to changes in interest...
Which of the following bonds has a price that is less sensitive to changes in interest rates? Group of answer choices A 11-year bond with face value of $100, coupon rate of 10%, annual coupon payments, and yield to maturity of 3.00% (APR). A 11-year bond with face value of $100, coupon rate of 15%, annual coupon payments, and yield to maturity of 3.00% (APR). A 11-year bond with face value of $100, coupon rate of 0%, annual coupon payments,...
Bond A has 2 years to maturity, 5% coupon rate, 5% YTM, $1000 par value, and...
Bond A has 2 years to maturity, 5% coupon rate, 5% YTM, $1000 par value, and semiannual coupons. Bond B has 10 years to maturity, 5% coupon rate, 5% YTM, $1000 par value, and semiannual coupons. Bond C has 10 years to maturity, 4% coupon rate, 5% YTM, $1000 par value, and semiannual coupons. Which comparison is TRUE? A. Bond A has higher price sensitivity than Bond B B. Bond C has higher price sensitivity than Bond A C. Bond...
If interest rates remain at 7.20%, what is the percentage capital gain or loss on bond A if you sell the bond in year 1?
1) Bond A has the following features:         Face value = $1,000,       Coupon Rate = 6%,       Maturity = 10 years, Yearly coupons         The market interest rate is 7.20%If interest rates remain at 7.20%, what is the percentage capital gain or loss on bond A if you sell the bond in year 1?State your answer to 2 decimal places (e.g., 3.56, 0.29)If there is a capital loss make sure to include a negative sign in your answer (e.g., -0.23)2) Bond E has the following...
The YTM on a bond is the interest rate you earn on your investment if interest...
The YTM on a bond is the interest rate you earn on your investment if interest rates don’t change. If you actually sell the bond before it matures, your realized return is known as the holding period yield (HPY). a. Suppose that today you buy an annual coupon bond with a coupon rate of 6 percent for $915. The bond has 10 years to maturity and a par value of $1,000. What rate of return do you expect to earn...
The riskiness of an asset's return that results from interest rate changes is called [A]. The...
The riskiness of an asset's return that results from interest rate changes is called [A]. The risk that a bond's future coupon payments may have to be invested at a rate lower than the bond's yield to maturity is called [B]. The average lifetime of a debt security's stream of payments is called [C]_. If an investor's holding period is longer than the term to maturity of a bond, he or she is exposed to [D]. The change in the...
The YTM on a bond is the interest rate you earn on your investment if interest...
The YTM on a bond is the interest rate you earn on your investment if interest rates don’t change. If you actually sell the bond before it matures, your realized return is known as the holding period yield (HPY). Requirement 1: Suppose that today you buy an annual coupon bond with a coupon rate of 7 percent for $875. The bond has 10 years to maturity. What rate of return do you expect to earn on your investment? (Do not...
The YTM on a bond is the interest rate you earn on your investment if interest...
The YTM on a bond is the interest rate you earn on your investment if interest rates don’t change. If you actually sell the bond before it matures, your realized return is known as the holding period yield (HPY). Requirement 1: Suppose that today you buy an annual coupon bond with a coupon rate of 7 percent for $875. The bond has 10 years to maturity. What rate of return do you expect to earn on your investment? (Do not...
The YTM on a bond is the interest rate you earn on your investment if interest...
The YTM on a bond is the interest rate you earn on your investment if interest rates don’t change. If you actually sell the bond before it matures, your realized return is known as the holding period yield (HPY). a. Suppose that today you buy an annual coupon bond with a coupon rate of 8.1 percent for $855. The bond has 7 years to maturity and a par value of $1,000. What rate of return do you expect to earn...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT