a. An investment in a coupon bond will provide the investor with a return equal to the

Question:

a. An investment in a bond will provide the investor with a return equal to the bond’s yield to at the time of purchase if:
i. The bond is not called for redemption at a price that exceeds its par value.
ii. All sinking fund payments are made in a prompt and timely fashion over the life of the issue.
iii. The reinvestment rate is the same as the bond’s yield to and the bond is held until All of the above.
b. A bond with a call feature:
i. Is attractive because the immediate receipt of principal plus premium produces a high return.
ii. Is more apt to be called when interest rates are high because the interest savings will be greater.
iii. Will usually have a higher yield to than a similar non-callable bond.
iv. None of the above.
c. In which one of the following cases is the bond selling at a discount?
i. rate is greater than current yield, which is greater than yield to rate, current yield, and yield to are all the same.
iii. rate is less than current yield, which is less than yield to rate is less than current yield, which is greater than yield to Consider a 5-year bond with a 10% that has a present yield to of 8%. If interest rates remain constant, 1 year from now the price of this bond will be:
i. Higher.
ii. Lower.
iii. The same.
iv. Par.

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...