Coupon rate and coupon payments made annually

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Reference no: EM131499656

1. Walmart has an outstanding bond with a 5 percent coupon rate and coupon payments made annually. It is currently selling at a premium and matures in 6 years. Walmart issued the bond 4 years ago at par. Which one of the following statements is correct for this bond today?

The coupon rate is greater than the current yield.

The face value of the bond today is greater than it was when the bond was issued.

The yield-to-maturity is greater than the coupon rate.

The yield-to-maturity is less than the coupon rate.

The bond is worth less today than when it was issued.

2. Among the bonds provided below, which one of them has the lowest interest rate risk?

3-year; 4 percent coupon

3-year; 6 percent coupon

7-year; 4 percent coupon

5-year; 6 percent coupon

7-year; 6 percent coupon

3. The yields on a corporate bond differ from those on a comparable Treasury security is due to ______________.

I. taxability

II. default risk

III. inflation risk

IV. interest rate risk

I, II, and IV only

I and II only

I, II, III, and IV

II, III, and IV only

III and IV only

Reference no: EM131499656

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