Question

Which of the following statements is? FALSE?

A. The simplest type of bond is a zero?coupon bond.

B. Prior to its maturity? date, the price of a zero?coupon bond is
always greater than its face value.

C. The amount of each coupon payment is determined by the coupon
rate of the bond.

D. Treasury bills are U.S. government bonds with a maturity of up
to one year.

Answer #1

**The False
Statement is " B. Prior to its maturity? date, the price of a
zero?coupon bond is always greater than its face value
"**

**The Price of a Zero Coupen Bond will always be less than
it's face value or Par Value irrespectice of it's maturity date.
Since the Price of a Bond is calculated by discounting the Face
Value or It's Par Value by it's Yield To Maturity [YTM] or the
Market Rate**

**All other remaming
following statements are TRUE**

**The simplest type of bond is a zero?coupon
bond.**

**The amount of each coupon payment is determined by the
coupon rate of the bond.**

**Treasury bills are U.S. government bonds with a maturity
of up to one year.**

Which of the following statements is CORRECT?
One advantage of a zero coupon Treasury bond is that no one who
owns the bond has to pay any taxes on it until it matures or is
sold.
Long-term bonds have less price risk but more reinvestment risk
than short-term bonds.
If interest rates increase, all bond prices will increase, but
the increase will be greater for bonds that have less price
risk.
Relative to a coupon-bearing bond with the same maturity,...

Which of the following statements is CORRECT?
One advantage of a zero-coupon Treasury bond is that no one who
owns the bond has to pay any taxes on it until it matures or is
sold.
Long-term bonds have less price risk but more reinvestment risk
than short-term bonds.
If interest rates increase, all bond prices will increase, but
the increase will be greater for bonds that have less price
risk.
Relative to a coupon-bearing bond with the same maturity, a...

Which of the following statements is correct?
A) The yield to maturity for a coupon bond that sells at its par
value consists entirely of an interest yield; it has a zero
expected capital gains yield.
B) Rising inflation makes the actual yield to maturity on a bond
greater than the quoted yield to maturity which is based on market
prices.
C) all of the above statements are false
D)On an expected yield basis, the expected capital gains yield
will...

a) Describe the key feature of a zero-coupon bond. (1 mark) b)
“The price of a zero coupon bond should be equal to its face
value.” True or false? Explain. c) “The yield to maturity
of a discount bond is greater than its coupon rate.” True or false?
Explain. d) You just purchased a 12-year semi-annual
coupon bond with a par value of $1,000 and a coupon rate of 7%. The
nominal yield to maturity is 6% per annum. Calculate...

a) Describe the key feature of a zero-coupon bond. (1 mark)
b) “The price of a zero coupon bond should be equal to its face
value.” True or false? Explain.
c) “The yield to maturity of a discount bond is greater than its
coupon rate.” True or false? Explain.
d) You just purchased a 12-year semi-annual coupon bond with a
par value of $1,000 and a coupon rate of 7%. The nominal yield to
maturity is 6% per annum. Calculate...

What is the price of a $1000 face value zero-coupon bond with 4
years to maturity if the required return on these bonds is 3%?
Consider a bond with par value of $1000, 25 years left to
maturity, and a coupon rate of 6.4% paid annually. If the yield to
maturity on these bonds is 7.5%, what is the current bond
price?
One year ago, your firm issued 14-year bonds with a coupon rate
of 6.9%. The bonds make semiannual...

The government in the U.S. issues zero-coupon bonds up to
one-year maturity, but STRIPS are "manufactured" zero-coupon bonds
with maturities up to 30 years. So, for example, a financial
institution could first buy 250 30-year coupon bonds issued by the
government that each pays $4 of coupon every six months. The
institution could then sell the combined coupons totaling $1,000 as
a separate zero-coupon bond for each maturity ranging from 6 months
up to 30 years. This is a financial...

22. Consider a 2-year zero-coupon bond and a 2-year coupon bond
that both have a face value of $100. The coupon bond has a coupon
interest rate equal to 5%. Both bonds currently have the same yield
to maturity of 6%. Which statement is FALSE?
A) Both bonds are trading at a discount.
B) The zero-coupon bond is trading at a discount but the coupon
bond is trading at a premium.
C) The internal rate of return for both bonds...

A "zero coupon bond" (or just "zero") is a bond, that does not
pay any interest, it just pays the face value when it matures. Of
course nobody would purchase a bond without interest, that's why
zero coupon bonds are sold at a discount.
Suppose you are given the following information about the
current prices of zero coupon bonds:
bond:
price
1-year zero, face value $1,000
$909.09
2-year zero, face value $1,000
$826.45
3-year zero, face value $1,000
$718.65
I.e....

Which of the following statements is true for zero coupon bonds
(other things being equal)?
Select one:
a. Their price increases as market interest rates rise.
b. Their price falls as they approach their maturity date.
c. They always trade at a discount.
d. Their price remains constant throughout their life.

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 6 minutes ago

asked 57 minutes ago

asked 59 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago