A 20-year bond with a face value of $1,000 currently sells for $1,050. One year later,...
A 20-year bond with a face value of $1,000 currently sells for $1,050. One year later, if interest rates have not changed: (you can always do the math)
|
The bond’s price will still be exactly $1,050. |
||
|
The bond’s price will still be slightly more. |
||
|
The bond’s price will still be slightly less. |
||
|
The bond’s price will still be significantly more, (say $50 more). |
||
|
The bond’s price will still be significantly less, (say $50 less). |
Homework Answers
When bond price is higher than the bond par value, bond ytm will be lower than the coupon rate. Bond price will decrease gradually to par value.
Hence, correct option is “The bond’s price will still be slightly less.”
*Please rate thumbs up
Add Answer to:
A 20-year bond with a face value of $1,000 currently sells for
$1,050. One year later,...
A 20-year bond with a face value of $1,000 currently sells for $1,100. One year later,...
A 20-year bond with a face value of $1,000 currently sells for $1,100. One year later, if interest rates have not changed: (you can always do the math) The bond’s price will still be exactly $1,100. The bond’s price will still be slightly more. The bond’s price will still be slightly less. The bond’s price will still be significantly more, (say $50 more). The bond’s price will still be significantly less, (say $50 less).
A 30-year bond, with a face value of $1,000 currently sells for $1200. For this bond:...
A 30-year bond, with a face value of $1,000 currently sells for $1200. For this bond: The bond’s coupon rate exceeds the discount rate. The bond’s coupon rate is identical to the discount rate. The bond’s price is at a discount. The bond’s price is at a par. The bond’s coupon rate is less than the discount rate.
8. A 15-year bond with a face value of $1,000 currently sells for $900. Which of...
8. A 15-year bond with a face value of $1,000 currently sells for $900. Which of the following CORRECT? a. The bond's coupon rate exceeds its current yleld. b. The bond's yield to maturity or discount rate is more than its coupon rate. e. The bond's yield to maturity or discount rate is less than its coupon rate. d. The bond's current yield is equal to its coupon rate. e. If the yield to maturity stays constant until the bond...
Consider an eight-year, 11.5 percent annual coupon bond with a face value of $1,000. The bond...
Consider an eight-year, 11.5 percent annual coupon bond with a face value of $1,000. The bond is trading at a rate of 8.5 percent. a. What is the price of the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) Price of the bond $ b. If the rate of interest increases 1 percent, what will be the bond’s new price? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g.,...
Consider a 15-year, 5 percent annual coupon bond with a face value of $1,000. The bond...
Consider a 15-year, 5 percent annual coupon bond with a face value of $1,000. The bond is trading at a rate of 4 percent. a. What is the price of the bond? b. If the rate of interest increases 1 percent, what will be the bond’s new price? c. Using your answers to parts (a) and (b), what is the percentage change in the bond’s price as a result of the 1 percent increase in interest rates? (Negative value should...
Consider a(n) Five-year, 11 percent annual coupon bond with a face value of $1,000. The bond...
Consider a(n) Five-year, 11 percent annual coupon bond with a face value of $1,000. The bond is trading at a rate of 8 percent. a. What is the price of the bond? b. If the rate of interest increases 1 percent, what will be the bond’s new price? c. Using your answers to parts (a) and (b), what is the percentage change in the bond’s price as a result of the 1 percent increase in interest rates? (Negative value should...
A 20-year bond pays 9% on a face value of $1,000. If similar bonds are currently...
A 20-year bond pays 9% on a face value of $1,000. If similar bonds are currently yielding 6%, what is the market value of the bond? Use annual analysis. Use time value of money tables in Appendix B and Appendix D. Multiple Choice Under $1,300 Exactly $1,000 Over $1,300 Not enough information is given to tell.
A 20-year maturity bond with face value of $1,000 makes annual coupon payments and has a...
A 20-year maturity bond with face value of $1,000 makes annual coupon payments and has a coupon rate of 10.00%. (Do not round intermediate calculations. Enter your answers as a percent rounded to 3 decimal places.) a. What is the bond’s yield to maturity if the bond is selling for $1,100? Yield to maturity % b. What is the bond’s yield to maturity if the bond is selling for $1,000? Yield to maturity % c. What is the bond’s yield...
A 20-year maturity bond with face value of $1,000 makes annual coupon payments and has a...
A 20-year maturity bond with face value of $1,000 makes annual coupon payments and has a coupon rate of 6%. a. What is the bond’s yield to maturity if the bond is selling for $990? (Do not round intermediate calculations. Round your answer to 3 decimal places.) Yield to maturity % b. What is the bond’s yield to maturity if the bond is selling for $1,000? Yield to maturity % c. What is the bond’s yield to maturity if the...
A 20-year maturity bond with face value of $1,000 makes annual coupon payments and has a...
A 20-year maturity bond with face value of $1,000 makes annual coupon payments and has a coupon rate of 6%. a. What is the bond’s yield to maturity if the bond is selling for $990? (Do not round intermediate calculations. Round your answer to 3 decimal places.) Yield to maturity % b. What is the bond’s yield to maturity if the bond is selling for $1,000? Yield to maturity % c. What is the bond’s yield to maturity if the...
8. A 15-year bond with a face value of $1,000 currently sells for $900. Which of the following CORRECT? a. The bond's coupon rate exceeds its current yleld. b. The bond's yield to maturity or discount rate is more than its coupon rate. e. The bond's yield to maturity or discount rate is less than its coupon rate. d. The bond's current yield is equal to its coupon rate. e. If the yield to maturity stays constant until the bond...
Most questions answered within 3 hours.
-
Where is the error in this code sequence?
String s1 = "Hello";
String s2 = "ello";...
asked 11 months ago -
Financial data for Joel de Paris, Inc., for last year
follow:
Joel de Paris, Inc.
Balance...
asked 11 months ago -
Consider this reaction:
Al2(SO4)3 (aq)+ BaCl3
(aq) Al2Cl6 (aq)- +
3BaSO4(s) . What is the...
asked 11 months ago -
Suppose that Savneet is considering increasing her
recent random sample from 20 car rentals to 40...
asked 11 months ago -
Trucks arrive at an unloading terminal at an average rate of 120
per hour.
Trucks arrive...
asked 11 months ago -
Why are methanol and ethanol completely soluble in water while
octanol is not very little soluble....
asked 11 months ago -
A facilities manager at a university reads in a research report
that the mean amount of...
asked 11 months ago -
When the CuSO4 is rehydrated by adding water to the anhydrous
compound, is this an endothermic...
asked 11 months ago -
A ray of sunlight is passing from diamond into crown glass; the
angle of incidence is...
asked 11 months ago -
A block of mass 0.249 kg is placed on top of a light, vertical
spring of...
asked 11 months ago -
how do the kidneys compensate in the presences of acidosis
a) trigger hyperventilate
b) reserve acid...
asked 11 months ago -
Question 501 pts
The rental rate of capital to the firm increases. Which of the
following...
asked 11 months ago