A bond is trading at a premium if its:

Consider the following bonds: Coupon Rate Maturity Bond (annual payments) (years) A 0% 15 B 0%...

Consider the following bonds: Coupon Rate Maturity Bond (annual payments) (years) A 0% 15 B 0% 10 C 4% 15 D 8% 10 a. What is the percentage change in the price of each bond if its yields to maturity falls from 6% to 5%? Par value Yield to maturity Price at Percentage Bond Coupon Rate Maturity Price 5.00% Change A B C D b. Which of the bonds A–D are most sensitive to a 1% drop in interest rates...

22. Consider a 2-year zero-coupon bond and a 2-year coupon bond that both have a face...

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...

Table 2 Bond                      Coupon Rate                &n

Table 2 Bond                      Coupon Rate                      Maturity (years) A 6% 10 B 6% 5 C 8% 5              All three bonds above are currently trading at par value. See Table 2 above. Relative to Bond B, for a 200 basis point decrease in the required rate of return, Bond C will most likely exhibit a(n): A. equal percentage price change B. greater percentage price change C. smaller percentage price change D. no price change

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...

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...

Choose all correct statements. 1.The yield to maturity on a premium bond exceeds the bond's coupon...

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

Which one of the following is true? I. A premium bond has a coupon rate below...

Which one of the following is true? I. A premium bond has a coupon rate below market interest rate. II. As time passes, price of zero-coupon bond rises and approaches par value until maturity date. III. Market interest rate is positively associated with bond price IV. The longer the maturity of the bond, the greater the sensitivity of its price to fluctuations in the interest rate. A. I&II only B. II&IVonly C. I&IV only D. Ionly

1. In the context of bond valuation, what does a built-in put option do? Select one:...

1. In the context of bond valuation, what does a built-in put option do? Select one: a. It gives the bond issuer the right buy the bond back from the bond holder prior to maturity. b. It gives the bond holder the right to sell the bond back to the bond issuer prior to maturity. c. Both of the above. d. None of the above. 2. Which of the following is mostly likely to lead to an increase in the...

A bond with 6 years remaining until maturity is currently trading for 102 per 100 of...

A bond with 6 years remaining until maturity is currently trading for 102 per 100 of par value. The bond offers an 8% coupon rate with interest paid semiannually. The bond is first callable in 2 years, and is callable after that date on coupon dates according to the following schedule. End of Year 4 5 6 Call price 103 102 100 A. What is the bonds YTM? B. The bond's annual yield-to-first call is closest to? C. What is...

Bond 1 and Bond 2 both have a face value of $1,000. Bond 1 pays a...

Bond 1 and Bond 2 both have a face value of $1,000. Bond 1 pays a 5% coupon (annual payments) while Bond 2 is a zero coupon bond. On November 30, 2014 (immediately after the annual coupon payment), Bond 1 had exactly 20 years to maturity, while Bond 2 had 15 years to maturity. The yield to maturity for each bond was 10% on November 30, 2014, and was 8% on November 30, 2015. E. Which bond was more “sensitive”...