Question

Complete the following statements re bond relationships for a bond with a par value of $1,000....

  1. Complete the following statements re bond relationships for a bond with a par value of $1,000. Fill in each blank with either: is less than, is greater than, equals.

  1. Discount Bond Price ______________________ $1,000.
  2. Premium Bond Price ______________________ $1,000.
  3. Discount Bond Coupon Rate ________________ Discount Bond Yield to Maturity.
  4. Premium Bond Coupon Rate ________________ Premium Bond Yield to Maturity.
  5. Par Value Bond Coupon Rate ________________ Par Value Bond Yield to Maturity.
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

A bond selling at discount means that is selling below par value. It happens when Coupon rate is lower than Yield to maturity

A bond selling at par means that it is selling at the par value. This happens when coupon rate is equal to the Yield to Maturity

A bond selling at premium means that it is selling above par vale. It happens when coupon rate is greater than yield to maturity

The answers are as follows:

a.Discount Bond Price IS LESS THAN $1,000

b.Premium Bond Price IS GREATER THAN $1,000

c.Discount Bond Coupon Rate IS LESS THAN Discount Bond yield to maturity

d. Premium Bond Coupon Rate IS GREATER THAN Premium Bond yield to maturity

e. Par Value Bond Coupon Rate EQUALS Par Value Bond Yield to maturity

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
A bond of Visador Corporation pays ​$80 in annual​ interest, with a ​$1,000 par value. The...
A bond of Visador Corporation pays ​$80 in annual​ interest, with a ​$1,000 par value. The bonds mature in 18 years. The​ market's required yield to maturity on a​ comparable-risk bond is 8.5 percent. a.  Calculate the value of the bond. b.  How does the value change if the​ market's required yield to maturity on a​ comparable-risk bond​ (i) increases to 11percent or​ (ii) decreases to 5 percent? c.  Interpret your finding in parts a and b. a. What is...
Suppose a​ seven-year, $1,000 bond with a 7.6% coupon rate and semiannual coupons is trading with...
Suppose a​ seven-year, $1,000 bond with a 7.6% coupon rate and semiannual coupons is trading with a yield to maturity of 6.54%. a. Is this bond currently trading at a​ discount, at​ par, or at a​ premium? Explain. b. If the yield to maturity of the bond rises to 7.33% (APR with semiannual​ compounding), what price will the bond trade​ for? a. Is this bond currently trading at a​ discount, at​ par, or at a​ premium? Explain.  ​(Select the best...
7) The prices of several bonds with face values of $1,000 are summarized in the following​...
7) The prices of several bonds with face values of $1,000 are summarized in the following​ table: Bond A B C D Price $905.72 $057.48 $1,179.66​ $1,000.00 For each​ bond, provide an answer for whether it trades at a​ discount, at​ par, or at a premium. Bond A trades at​ (a).----------------? Is it Discount, Par Or Premium?    (Select from the​ drop-down menu.) 5) Suppose a 10​-year, $1,000 bond with a 12% coupon rate and semiannual coupons are trading for a...
Suppose a​ seven-year, $1,000 bond with a 9.43%coupon rate and semiannual coupons is trading with a...
Suppose a​ seven-year, $1,000 bond with a 9.43%coupon rate and semiannual coupons is trading with a yield to maturity of 6.87%. a. Is this bond currently trading at a​ discount, at​ par, or at a​ premuim? Explain. The bond is currently trading...  ​(Select the best choice​ below.) A. ... at a premium because the yield to maturity is greater than the coupon rate. B... at par because the coupon rate is equal to the yield to maturity C... at a...
a 20 year, 8% coupon rate, $1,000 par bond that pays interest semi-annually bought five years...
a 20 year, 8% coupon rate, $1,000 par bond that pays interest semi-annually bought five years ago for $850. this bond is currently sold for 950. what is the yield on this bond? a.12.23% b.11.75% c.12.13% d.11.23% an increase in interest rates will lead to an increase in the value of outstanding bonds. a. true b. false a bond will sell ____ when coupon rate is less than yield to maturity, ______ when coupon rate exceeds yield to maturity, and...
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...
Three 10-year, $1,000 par value, noncallable bonds have the same level of risk. Bond EIGHT has...
Three 10-year, $1,000 par value, noncallable bonds have the same level of risk. Bond EIGHT has an eight percent annual coupon, Bond TEN has a ten percent annual coupon, and Bond TWELVE has a twelve percent annual coupon. Bond TEN sells for $1,000. Assuming that interest rates remain constant for the next ten years, which of the following statements is CORRECT? - Bond EIGHT sells at a discount (its price is less than par), and its price is expected to...
The Market value of a bond will be less than the par value if the market's...
The Market value of a bond will be less than the par value if the market's required yield to maturity is---------------- the coupon interest rate this is known as -------------- A. below , discount bond B. above , discount bond C. below , premium bond D. Above premium bond E not enough information
PART 2 - BOND CALCULATIONS a) What is the price of a $1,000 par value, semi-annual...
PART 2 - BOND CALCULATIONS a) What is the price of a $1,000 par value, semi-annual coupon bond with 16 years to maturity, a coupon rate of 5.40% and a yield-to-maturity of 5.90%? b) What is the price of a $1,000 par value, 10 year, annual coupon bond with a 5.80% coupon rate and a yield to maturity of 5.50% c) A 10-year, 6.30% semi-annual coupon bond today and the current market rate of return is 5.60%. The bond is...
Consider a 10-year, $1,000 par value bond that pays annual coupons. Coupon rate of the bond...
Consider a 10-year, $1,000 par value bond that pays annual coupons. Coupon rate of the bond is 9%. If the current price of this bond is $900, we can infer that the yield-to-maturity (YTM) of this bond is _________. A. less than 9% B. equal to 9% C. Not enough information D. greater than 9%
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT