Question

Choose all correct statements. The yield to maturity on a discount bond exceeds the bond's coupon...

Choose all correct statements.

  1. The yield to maturity on a discount bond exceeds the bond's coupon rate
  2. The higher the yield to maturity, the lower the current price of the bond.
  3. All else equal, the current price of a bond increases when the coupon rate decreases.
  4. The regular interest payment of a bond is called the coupon payment.

Homework Answers

Answer #1

Solution :-

The Statement (A) that The yield to maturity on a discount bond exceeds the bond's coupon rate is Correct

The Statement (B) that is The higher the yield to maturity, the lower the current price of the bond is Correct

The Statement (C) that is All else equal, the current price of a bond increases when the coupon rate decreases is Incorrect As there is a direct relation between Coupon rate and Price of Bond

The Statement (D) that is The regular interest payment of a bond is called the coupon payment. is Correct

Therefore the statement (a) , (b) and (d) are Correct

If there is any doubt please ask in comments

Thank you please rate

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Choose all correct statements. 1.The yield to maturity on a premium bond exceeds the bond's coupon...
Choose all correct statements. 1.The yield to maturity on a premium bond exceeds the bond's coupon rate 2.The higher the yield to maturity, the lower the current price of the bond. 3.All else equal, the current price of a bond increases when the coupon rate decreases. 4.The regular interest payment of a bond is called the coupon payment. Group of answer choices
If a bond's yield to maturity exceeds its coupon rate, the bond's: d. current yield is...
If a bond's yield to maturity exceeds its coupon rate, the bond's: d. current yield is equal to the capital gain on the maturity of the bond. b. price must be less than its par value. a. current yield is equal to the coupon rate. c. maturity value is more than its face value.
Choose the CORRECT statement from the following: Select one: a. If a bond’s yield to maturity...
Choose the CORRECT statement from the following: Select one: a. If a bond’s yield to maturity exceeds its coupon rate, the bond’s current yield must be less than its coupon rate. b. All else equal, an increase in interest rates will have a greater effect on higher-coupon bonds than it will have on lower-coupon bonds. c. If two bonds have the same maturity, the same yield to maturity, and the same level of risk, the bonds should sell for the...
Assume a discount bond has a few years until maturity and a positive yield. All else...
Assume a discount bond has a few years until maturity and a positive yield. All else constant, the bond's yield to maturity is A. directly related to the time to maturity. B. equal to the coupon rate. C. inversely related to the bond's market price. D. unrelated to the time to maturity. E. less than its coupon rate.
When a bond's yield to maturity is higher than the bond's coupon rate, the bond: A....
When a bond's yield to maturity is higher than the bond's coupon rate, the bond: A. has a high risk of default B. has reached its maturity date C. is selling at a discount D. is priced at par E. is selling at a premium
1) Which of the following statements is correct? a) If a bond is at a discount,...
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...
Which one of the following statements is true? Question 13 options: 1) A premium bond has...
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...
Which of the following statements about the yield to maturity on bonds is CORRECT? A. The...
Which of the following statements about the yield to maturity on bonds is CORRECT? A. The yield to maturity on a bond may change according to the market conditions. B. The yield to maturity on a bond will be mentioned in the bond security and remain constant throughout the life of the bond. C. The yield to maturity determines how much interest payment will be made to the bondholders. D. The yield to maturity will always be equal to the...
Everything else held constant, the yield-to-maturity (YTM) of a bond __________. will equal the coupon rate...
Everything else held constant, the yield-to-maturity (YTM) of a bond __________. will equal the coupon rate if the bond sells at par value will decrease if the price of the bond increases A and B are both correct will be lower than the coupon rate if the bond sells below par value
Which of the following statements is most correct? a.         All else equal, if a bond’s yield to...
Which of the following statements is most correct? a.         All else equal, if a bond’s yield to maturity increases, its price will fall. b.         All else equal, if a bond is down graded by the rating agencies its yield to maturity will increase. c.         If a firm has two bond issues that are identical except one is subordinate to the other, the subordinate issue will have a higher yield to maturity than the other issue. d.         A B and C are correct. e.         None of...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT