Question

Any regular coupon bond of any maturity will sell for its face
value if the coupon rate is the same as the market rate of
interest. **TRUE or FALSE? Explain and provide an example to
support your answer.**

Answer #1

Answer : True |

Explanation : There is an inverse relation between bond price and market rate of interest. |

If the market rate of interest is greater than the coupon rate, then the bond price will be lower than the face value |

If the market rate of interest is Lower than the coupon rate, then the bond price will be greater than the face value |

But If the market rate of interest is equal to the coupon rate, then the bond price will be equal to the face value |

If you have any doubt then please ask |

Please do rate the answer |

If the coupon rate is equal to the yield to maturity on a bond,
then the price of the bond is always equal to the par value.
Is this statement true or false? Explain and support your answer
with an example.

The face value of the bond is paid at the maturity of the
bond.
True
False
Which of the following is used as a discount rate while
calculating the bond price?
Yield to Maturity (YTM)
Coupon Rate
Face Value
None
Coupon payments are determined by multiplying face value of the
bond with the coupon rate.
True
False
Which of the following explains the differences in interest
rates?
The length of the investment (maturity premium).
The level of risk of the...

1. The face value of the bond is paid at the maturity of the
bond. True or false?
2. Which of the following is used as a discount rate while
calculating the bond price?
Yield to Maturity (YTM)
Coupon Rate
Face Value
None
3. Coupon payments are determined by multiplying face value of
the bond with the coupon rate. True or false?
4. Which of the following explains the differences in interest
rates?
The length of the investment (maturity premium)....

You buy a bond with two years to maturity, a face value of
$4,000 and an annual coupon payment of $300. Show your calculations
(or explain your answer in one sentence if there are no
calculations) for each question below
After 1 year, you cash in the coupon and sell the bond. If the
market interest rate is now 3%, how much can you sell your bond
for?
Calculate (i) the rate of capital gains, and (ii) your total
rate...

Bond A has the following features: Face value = $1,000, Coupon
Rate = 5%, Maturity = 9 years, Yearly coupons The market interest
rate is 7.92% If interest rates remain at 7.92%, 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).

Bond A has the following features:
Face value =
$1,000,
Coupon Rate = 9%,
Maturity = 6 years, Yearly coupons
The market
interest rate is 5.34%
If interest rates remain at 5.34%, 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.,...

Bond A has the following features: Face value = $1,000, Coupon
Rate = 10%, Maturity = 9 years, Yearly coupons The market interest
rate is 3.41% If interest rates remain at 3.41%, 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)

True or False and Explain
The yield to maturity of a coupon bond that is selling for less
than its face value is less than the coupon rate.

You observe following three securities in the market.
(1)Zero-coupon bond: Maturity = 5 years, Face value = $500,
Current price = $332.52.
(2)Regular coupon bond: Maturity = 5 years, Face value = $1,500,
Coupon rate = 8%, Current price = $1477.16.
(3)Regular Annuity: Maturity = 5 years, Annual payments in
arrears = $240, Current price = $974.20.
Suppose that, you are convinced that the prices of zero-coupon
and regular coupon bonds are done correctly in the market. Then, as
per...

Bond A has the
following features:
Face value =
$1,000,
Coupon Rate =
5%,
Maturity = 10 years,
Yearly coupons
The market
interest rate is 6.30%
What is the current
yield for bond A from today to year 1?
Calculate your answer
to 2 decimal places (e.g., 5.23)

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