Each pay interest of 120 annually Bond A will mature in 5 years while bond B

Each pay interest of 120 annually bond a will mature

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Each pay interest of $120 annually. Bond A will mature in 5 years while bond B will mature in 6 years. If the yields to maturity on the two bonds change from 12% to 14%, _________. D. both bonds will decrease in value but bond B will decrease more than bond A 10-2
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Chapter 10 - Bond Prices and Yields Everything else equal _________ bonds will require a higher promised YTM than ________ bonds. A. catastrophe; standard Bonds with coupon rates that fall when the general level of interest rates rise are called _____________. C. inverse floaters _______ bonds represent a novel way of obtaining insurance from capital markets against specified disasters. C. Catastrophe The issuer of a/an ________ bond may choose to pay interest either in cash or in additional bonds. D. pay in kind Everything else equal the __________ the maturity of a bond and the __________ the coupon the greater the sensitivity of the bond's price to interest rate changes. B. longer; lower Which one of the following statements is correct? B. Invoice price = Flat price + Accrued Interest A __________ bond is a bond where the issuer has an option to retire the bond before maturity at a specific price after a specific date. A. callable Which of the following possible provisions of a bond indenture is designed to ease the burden of principal repayment by spreading it out over several years? D. Sinking fund Serial bonds are associated with _________. A. staggered maturity dates In an era of particularly low interest rates, which of the following bonds is most likely to be called? C. Coupon bonds selling at a premium Consider the expectations theory of the term structure of interest rates. If the yield curve is downward sloping, this indicates that investors expect short-term interest rates to __________ in the future. B. decrease 10-3
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Chapter 10 - Bond Prices and Yields A convertible bond has a par value of $1,000 but its current market price is $975. The current price of the issuing company's stock is $26 and the conversion ratio is 34 shares. The bond's market conversion value is _________. B. $884 A convertible bond has a par value of $1,000 but its current market price is $950. The current price of the issuing company's stock is $19 and the conversion ratio is 40 shares. The bond's conversion premium is _________. B. $190.00 A coupon bond which pays interest of 4% annually, has a par value of $1,000, matures in 5 years, and is selling today at $785. The actual yield to maturity on this bond is _________. D. 9.6% A coupon bond which pays interest of $60 annually, has a par value of $1,000, matures in 5 years, and is selling today at a $84.52 discount from par value. The approximate yield to maturity on this bond is _________. C. 8% A coupon bond which pays interest of $60 annually, has a par value of $1,000, matures in 5 years, and is selling today at a $75.25 discount from par value. The current yield on this bond is _________. B. 6.49% A callable bond pays annual interest of $60, has a par value of $1,000, matures in 20 years but is callable in 10 years at a price of $1,100, and has a value today of $1055.84. The yield to call on this bond is _________.
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