Bond value, yield to maturity, coupon rate, current yield
Which of the following statements is the most correct and why?
A.If a bond sells for less than par, then its yield to maturity is less than its coupon rate.
B. If a bonds sell at par, then its current yield will be less than yield to maturity.
C. Assuming that both are held to maturity and are equal risk, a bond selling for more than par with ten yrs to maturity will have a lower current yield and higher capital gain relative to bond that sells at par.
D.Anwers are A and C
E. None of the anwers above
Solution Preview
Which of the following statements is the most correct and why?
A .If a bond sells for less than par, then its yield to maturity is less than its coupon rate.
B. If a bonds sell at par, then its current yield will be less than yield to maturity.
C. Assuming that both are held to maturity and are equal risk, a bond selling for more than par with ten yrs to maturity will have a lower current yield and higher capital gain relative to bond that sells at par.
D. Answers are A and C ...
Solution Summary
A multiple choice question on bon values has been answered.
... less than the coupon rate, the bond sells for more than the par value ($1000) and the current yield is less than the coupon rate When yield to maturity is more ...
... 10.71% Current yield= Annual interest / Bond Price= $105/$980=. ...Yield to maturity can be calculated using Excel ...Coupon rate= 10.50% Face value= $1,000 Frequency ...
... The par value of the bonds is $1,000. The yield to maturity is 7 percent. a. What is the bond's price today ? b. What is the bond's current yield ? ...
...Coupon rate= 8% Interest payment= $80.00 =8%*1000 Price= $1,000 Therefore yield= 8% =80/1000. Since the bond is selling at the par value of $1000 the yield...
... is the expected current yield and the expected capital gains yield? ... The bonds have an 8 percent annual coupon rate and ... 1 year ago at their par value of $1,000 ...
... Conduct a sensitivity analysis of pr yield to maturity... We will calculate the price of bond at different ...maturity= 10 Coupon rate= 12% Face value= 1000 Frequency ...
... the current price of 1100. The solution calculates Bond Yields- Current Yield and Yield to Maturity. An AT&T bond has 10 years until maturity, a coupon rate of ...
... What is the bond's current yield? 8. Capital Gains Yield 1 A bond selling for $1,117.34 has a $1,000 par value, an 8.10% coupon rate, annual payments ...
...current yield of the bond in question #2? Current yield = annual coupon / current price = 40 / 945.83 ... pay 970 for a $1,000 deep discount bond that has 7 ...
