Unformatted text preview: D) The yield is less than the coupon rate when the bond price is below the par value. Answer: A 4. A discount bond selling for $15,000 with a face value of $20,000 in one year has a yield to maturity of A) 3 percent. B) 20 percent. C) 25 percent. 1 D) 33.3 percent. Answer: D 5. In your own words, describe what we mean by “present value”. 6. What happens to the present value of an expected future payment as the interest rate increases? Why? 7. The is the Fnal amount that will be paid to the holder of a coupon bond. 8. Say you get Fxed payment loan. You receive $10 today and make payments of $6 in one year and $6 in two years. How would you Fnd the yield to maturity (you don’t have to calculate it? 9. The interest rate is below the coupon rate. Is the price for this coupon bond greater than, less than, or equal to the face value? 10. What is the coupon rate of a $16,000 coupon bond with a $800 coupon payment every year? 2...
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- Fall '15
- $15,000, $10, $20,000, $16,000