Bond pays an annual coupon

Assignment Help Financial Management
Reference no: EM13879712

A 10-year bond pays an annual coupon, its YTM is 8%, and it currently trades at a premium. Which of the following statements is CORRECT?

a. If the yield to maturity remains at 8%, then the bond’s price will decline over the next year.

b. The bond’s coupon rate is less than 8%.

c. The bond’s current yield is less than 8%.

d. If the yield to maturity increases, then the bond’s price will increase.

e. If the yield to maturity remains at 8%, then the bond’s price will remain constant over the next year.

Reference no: EM13879712

Questions Cloud

The health of an aquatic ecosystem : Why is N level is an important indicator of the health of an aquatic ecosystem? support with references (no website references)
Describe the creation and flow of csf : Describe the creation and flow of CSF in the Central Nervous System
Calculate basic earnings per common share : On September 1, 2013, Canaday sold 72 million additional shares of common stock.
Co2 concentration in earth''s atmosphere increasing : Now, I know you are thinking - 'That is a silly question, the answer is obviously human CO2 emissions'. However, that is only part of the answer - emissions (what type? what rates?) are only one part of the story. The contribution from human emission..
Bond pays an annual coupon : A 10-year bond pays an annual coupon, its YTM is 8%, and it currently trades at a premium. Which of the following statements is CORRECT?
Current yield equals its yield to maturity : If a coupon bond is selling at par, its current yield equals its yield to maturity. If a coupon bond is selling at a premium, its current yield equals its yield to maturity. If interest rates increase, the price of a 10-year coupon bond will decline ..
Cholesterol that is known as (ldl) : Cholesterol that is known as (LDL) stands for: A. Low-density lipoproteins   B. Low-density lysosomes    C. Level-density lipoproteins   D. Level-density lysosomes
Stockholders equity-what is its economic value added : Barnes’ Brothers has the following data for the year ending 12/31/10: Net income = $600; Net operating profit after taxes (NOPAT) = $700; Total assets = $2,500; Short-term investments = $200; Stockholders' equity = $1,800; Total debt = $700; and Tota..
Breathing properly requires the presence : Breathing properly requires the presence of what compound that affects surface tension of alveoli in the lungs? A. Potassium    B. Plasma     C. Surfactant    D. Sodium Chlorid

Reviews

Write a Review

Financial Management Questions & Answers

  For a company whose target capital structure calls

For a company whose target capital structure calls for 50% debt and 50% common equity, which of the following statements is CORRECT?  The cost of retained earnings typically exceeds the cost of new common stock.

  Should the new lathe be purchased

The firm estimates the revenues and expenses for the new and the old lathes to be as shown in the following table. The firm is subject to a 40% tax rate. Should the new lathe be purchased?

  Determine before tax-costs of debt financing of bond

Use the information below to determine before tax-costs of debt financing of bond S:

  Results of changes in the exchange rate

Early in September 1983, it took 260 Japanese yen to equal $1. Nearly 28 years later, in August 2011, that exchange rate had fallen to 110 yen to $1. What would the dollar price of the automobile be in August 2011, again assuming that the car's price..

  Present value of this investment pays

An investment pays you $20,000 at the end of this year, and $10,000 at the end of each of the four following years. What is the present value (PV) of this investment, given that the interest rate is 4% per year?

  Constructed pro forma balance sheet for next year

You constructed a pro forma balance sheet for next year and found that external financing required was negative (i.e., the company projected a financing surplus). Which of the following options, all else equal, would NOT correct the projected imbalan..

  Compute the correlation coefficient of the two return series

Compute the covariance of the two return series. Compute the correlation coefficient of the two return series. Compute the risk of the portfolio.

  Compute the npv of the project if the tax rate

The investment of $400 can be depreciated to zero book value over 10 years. EBITDA in year 1 is equal to $100, and from there on is expected to grow at 5% per year, every year, forever.  Compute the NPV of the project if the tax rate is 0% per year. ..

  What will be new purchase price for existing stockholders

katie homes and garden co has 10,640,000 shares outstanding. the stock is currently selling at $52 per share. if an unfriendly outside group acquired 25 percent of the shares, existing stockholders will be able to buy new shares at 30 percent below t..

  About the effective rate of interest

Find the interest rate (or rates of return) for each of the following situations. Round your answers to two decimal places. You borrow $700 and promise to pay back $749 at the end of 1 year. You lend $700 and receive a promise to be paid $749 at the ..

  Bankruptcy values of each tranche if enterprise value

Capital Structure: Initial value for: What are the bankruptcy values of each tranche if enterprise value is 400 million?

  Local finance company quotes interest rate on year loan

A local finance company quotes a 17 percent interest rate on one-year loans. So, if you borrow $25,000, the interest for the year will be $4,250. Because you must repay a total of $29,250 in one year, the finance company requires you to pay $29,250/1..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd