Yield to maturity on premium bond exceeds bond coupon rate

Assignment Help Financial Management
Reference no: EM131047342

Which one of the following statements is true?

The current yield on a par value bond will exceed the bond's yield to maturity.

The yield to maturity on a premium bond exceeds the bond's coupon rate.

The current yield on a premium bond is equal to the bond's coupon rate.

A premium bond has a current yield that exceeds the bond's coupon rate.

A discount bond has a coupon rate that is less than the bond's yield to maturity.

Reference no: EM131047342

Questions Cloud

Assume no further charges on the card : The average college graduating senior will have $4,138 in credit card debt. At the national average rate of 14.73%, what will the monthly payment have to be to pay off the debt in 3 years? (Assume no further charges on the card).
What is the total interest cost to borrow : Suppose you have a $7,500 balance on your credit card. The intrest rate is 15% and the monthly payment is $200.Reset the interest rate to 15% and change the balance to $2,500. What is the total interest cost to borrow?
The riskier stock exceed that on the less risky stock : Stock R has a beta of 2.1, Stock S has a beta of 0.45, the expected rate of return on an average stock is 9%, and the risk-free rate is 5%. By how much does the required return on the riskier stock exceed the required return on the riskier stock exce..
Simple interest on its investment accounts : First Simple Bank pays 8.3 percent simple interest on its investment accounts. First Complex Bank pays interest on its accounts compounded annually. Required: What rate should the bank set if it wants to match First Simple Bank over an investment hor..
Yield to maturity on premium bond exceeds bond coupon rate : The current yield on a par value bond will exceed the bond's yield to maturity. The yield to maturity on a premium bond exceeds the bond's coupon rate. The current yield on a premium bond is equal to the bond's coupon rate. A premium bond has a curre..
Which one of the cannot be computed : Which one of the following cannot be computed?
Describe accounting identity for not-for-profit organization : Which of the following individuals (or groups) are NOT stakeholders in not-for- profit corporations? Which of the following statements about not-for-profit corporations is most correct? Which of the following equations best describes the accounting i..
What level of pre-tax cost savings would you be indifferent : Your firm is contemplating the purchase of a new $720,000 million computer-based order entry system. The PVCCATS is $260,000, and the machine will be worth $280,000 at the end of the five-year life of the system. What if the pre-tax savings are only ..
The project will produce the after tax cash inflows : Marathon Technologies, Inc is using the modified internal rate of return (MIRR) when evaluating projects. The company is able to reinvest cash flows received from the project at an annual rate of 8.89%. The initial outlay for this project is 472,000...

Reviews

Write a Review

Financial Management Questions & Answers

  Planning to present performances

The Oviedo Thespians are planning to present performances of their Florida Revue on 2 consecutive nights in January. It will cost them $5,000 per night for theater rental, event insurance and professional musicians. The theater will also take 10% of ..

  No change in market risk premium

Suppose the risk-free rate is 9%, the rate of market return is 14%, and the beta for stock A is 1.3. What is the required return on stock A? Now suppose that the risk-free rate increases to 10%, the slope of the SML remains constant (no change in mar..

  What is the current value of the companys stock

JJ Industries will pay a regular dividend of $2.50 per share for each of the next four years. At the end of the four years, the company will also pay out a $61 per share liquidating dividend, and the company will cease operations. If the discount rat..

  When should bell mountain buy the new accounting system

Bell Mountain Vineyards is considering updating its current manual accounting system with a high-end electronic system. While the new accounting system would save the company money, the cost of the system continues to decline. Suggest when should Bel..

  What is transports cost of retained earnings

The risk free rate of return is 2.5% and the market return is 8%. Rogue Transport has a beta of 2.2 and a standard deviation of returns of 28%. Rogue Transport's marginal tax rate is 35%. Analysts expect Rogue Transport's dividends to grow by 6% per ..

  Planning to buy house appraised

You are planning to buy a house appraised for $350,000 and finance it through a mortgage of $250,000. You would then have a loan-to-value ratio of 0.714, safely below the cutoff by your lender of 0.80. Being securely employed, your take-home pay is $..

  Expected earnings before interest and taxes

L.A. Clothing has expected earnings before interest and taxes of $2,100, an unlevered cost of capital of 13 percent and a tax rate of 35 percent. The company also has $2,700 of debt that carries a 6 percent coupon. The debt is selling at par value. W..

  Beta of equity in the firm be after the leveraged buyout

Safecorp, which owns and operates grocery stores across the United States, currently has $50 million in debt and $100 million in equity outstanding. Its stock has a beta of 1.2. It is planning a leveraged buyout, where it will increase its debt/equit..

  Shares outstanding and target capital structure consisting

Hastings Corporation is interested in acquiring Vandell Corporation. Vandell has 1 million shares outstanding and a target capital structure consisting of 30% debt. Vandell's debt interest rate is 7.3%. Vandell's free cash flow (FCF0) is $2 million p..

  What is the equity value of the hmo

What is the equity value of the HMO using the Free Operating Cash Flow (FCOF) method and what impact would this change have on the equity value according to the FOCF method?

  Find the terminal stock price using a benchmark PE ratio

In practice, a common way to value a share of stock when a company pays dividends is to value the dividends over the next five years or so, then find the “terminal” stock price using a benchmark PE ratio. What is the target stock price in five years?..

  Retirement fund-amount of his monthly end-of-month payments

A man plans to work for 25 years and to make deposits into a retirement fund at the amount of 100 at the end of year month. The fund earns 6% nominal, converted monthly. The fund will be used to purchase a 20- year annuity-certain in retirement. Assu..

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