Finance

posted by .

Which of the following statments is CORRECT?

a. Assume that two bonds have equal maturities and are of equal risk, but one bond sells at par while the other sells at a premium above par. The premium bond must have a lower current yeild and a higher capital gains yield than the par bond.

b. A bond's current yield must always be either equal to its yield to maturity or between its yield to maturity and its coupon rate.

c. If a bond sells at par, then its current yield wii be less than its yield to maturity.

d. If a bond sell for less than par, then its yield to maturity is less than its coupon rate.

e. A discount bond's price declines each year until it matures, when its vaule equals its par value.

• Finance -

a. Assume that two bonds have equal maturities and are of equal risk, but one bond sells at par while the other sells at a premium above par. The premium bond must have a lower current yeild and a higher capital gains yield than the par bond.

b. A bond's current yield must always be either equal to its yield to maturity or between its yield to maturity and its coupon rate.

c. If a bond sells at par, then its current yield wii be less than its yield to maturity.

d. If a bond sell for less than par, then its yield to maturity is less than its coupon rate.

e. A discount bond's price declines each year until it matures, when its vaule equals its par value.

Similar Questions

1. Investing

Kelly Inc's 5 yr bond yield 7.50% and 5 yr T Bonds yield 4.50%.The risk free rate is r*=2.5, the default risk premium for kelly bonds is DRP=0.40%, the liquity premium on kelly's bond is LP=2.6% versus zero on T-bonds, and the inflation …
2. Finance

If 10 year T bonds have a yield of 5.2%, 10 year corporate bonds yield 7.5%, the maturity risk premium on all 10 year bonds is 1.1%, and corporate bonds have a 0.2% liquidity premium versus a zero liquidity premium for T bonds, what …
3. Finance

If 10 year T bonds have a yield of 5.2%, 10 year corporate bonds yield 7.5%, the maturity risk premium on all 10 year bonds is 1.1%, and corporate bonds have a 0.2% liquidity premium versus a zero liquidity premium for T bonds, what …
4. Finance

If 10 year T bonds have a yield of 5.2%, 10 year corporate bonds yield 7.5%, the maturity risk premium on all 10 year bonds is 1.1%, and corporate bonds have a 0.2% liquidity premium versus a zero liquidity premium for T bonds, what …
5. Finance

If 10 year T bonds have a yield of 5.2%, 10 year corporate bonds yield 7.5%, the maturity risk premium on all 10 year bonds is 1.1%, and corporate bonds have a 0.2% liquidity premium versus a zero liquidity premium for T bonds, what …
6. Finance

Benson Incorporated has bonds with the following features: Par value of 1,000, maturity of 12 years, and a coupon rate of 8%.The yield to maturity is 10%. Pleases determine if the bond sells for for a premium, par, or discount and …
7. Finance

Benson Incorporated has bonds with the following features par value of 1000.00 maturity is 10%. Determine if the bond sells for a premium, par, or discount and explain your answer. Calculate the value of the bond if interest is paid …
8. Finance

Answers for a 10 year us treasury bond has a 3.50 % interest rate, while a same maturity corporate bond has a 5.25 % interest rate. Real interest rates and inflation rate expectations would be for the two bonds. if default risk premium …
9. Finance

United Technology Corporation (UTC) has \$40 million of convertible bonds outstanding (40,000 bonds at \$1,000 par value) with a coupon rate of 11 percent. Interest rates are currently 8 percent for bond of equal risk. The bonds have …
10. finance

1. Yest Corporation's bonds have a 15-year maturity, a 7% semiannual coupon, and a par value of \$1,000. The market interest rate (r) is 6%, based on semiannual compounding. What is the bondâ€™s price?

More Similar Questions