Question

Which of the following statements is most INCORRECT?

Select one:

a. All else equal, an increase in the required rate of return will result in a decrease in bond price.

b. All else equal, you expect a capital loss on this bond investment at maturity.

c. This is a premium bond because its required rate of return is smaller than the coupon rate.

d. If the bond is callable, the YTC is a better estimate of this bond's expected return.

e. All else equal, the current yield on a premium bond will be larger than its coupon rate.

Answer #1

OPTION E

Bond price is inversely proportional to required return hence
Option A is correct

A premium bond's price decreases at maturity till it reaches par hence Option B is correct

A premium bond has price more than par value and required return smaller than the coupon rate hence Option C is correct

A callable bond has best estimate of yield as YTC hence Option D is correct

Current yield on premium bond is less than the coupon rate hence Option E is incorrect

Assuming all else is constant, which of the following statements
is CORRECT?
Answers:
a.
Price sensitivity as measured by the percentage change in price
due to a given change in the required rate of return decreases as a
bond's maturity increases.
b.
A 20-year zero coupon bond has more reinvestment rate risk than
a 20-year coupon bond.
c.
For any given maturity, a 1.0 percentage point decrease in the
market interest rate would cause a larger dollar capital gain than...

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...

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. Assuming all else is constant, which of the following
statements is CORRECT?
a. Other things held constant, a
20-year zero coupon bond has more reinvestment risk than a 20-year
coupon bond.
b. Other things held constant,
price sensitivity as measured by the percentage change in price due
to a given change in the required rate of return decreases as a
bond's maturity increases.
c. Other things held constant, for
any given maturity, a 1.0 percentage point decrease in the...

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

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.

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

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...

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...

All else equal, which of the following would be MOST preferable
from a bond ISSUER'S viewpoint?
A conventional fixed rate bond.
A putable bond.
A callable bond.
A step-up coupon bond.
All of the bonds listed are equally preferable from the issuer's
standpoint.

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