Question

A bond with an annual coupon of $100 originally sold at par for
$1,000. The current yield to maturity on this

bond is 9%. This bond would sell at

A. A discount to par.

B. At par.

C. At a premium to par.

D. Face value.

E. Not enough information.

Answer #1

c ) The Bond would trade at a premium to par .

Coupon Interest = $100

Current Yeild = Coupon Amount / Price

Mathematical Explanation : Where Current Yeild is < than the Coupon Amount , where as Coupon Amount is same in both calculations , then Price will be higher in order to Pull down the current yeild .

Financial Explanation : As coupon amount is fixed @ $100 and Current Yeild is 9% , in That case refer calculations below :

9% = $100 / Price

**Therefore , Price (
) = %1111.11 , which is at premium to its par at
$1000.**

**The premium is $111.11 or 11.11%**

t

A bond with an annual coupon of $50 originally sold at par for
$1,000 (several years ago). Today, the YTM on this bond is
currently 6%. This bond will currently sell at a_____________? a)
discount b)premium

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%

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...

A 10-year corporate bond has an annual coupon of 9% and a par
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to be CORRECT?
a. The bond’s yield
to maturity is 9%.
b. The bond’s current
yield is 9%.
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a.
premium
b.
not enough information provided to determine
c.
at par
d.
discount

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...

A corporation issues a 9 percent coupon bond with 13 years
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a. 6.43%
b. 6.04%
c. 9.00%
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e. none of the answers is correct

Consider an annual coupon bond with a $1000 par value and 5
years to maturity. The yield to maturity is 13% and the coupon rate
is 10%. If the yield to maturity is held constant, which of the
following can be inferred about this bond?
a
this bond is selling at a premium and the price will increase
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b
this bond is selling at a premium and the price will decrease
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c
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Discount Bond Price ______________________ $1,000.
Premium Bond Price ______________________ $1,000.
Discount Bond Coupon Rate ________________ Discount Bond Yield
to Maturity.
Premium Bond Coupon Rate ________________ Premium Bond Yield to
Maturity.
Par Value Bond Coupon Rate ________________ Par Value Bond
Yield to Maturity.

PART 2 - BOND CALCULATIONS
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c) A 10-year, 6.30% semi-annual coupon bond today and the
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