Question
1. If the yields rise above the coupon, the price of the bond a) At a premium. b) At Par c) Cannot be determined. d)
1. If the yields rise above the coupon, the price of the bond
a) At a premium.
b) At Par
c) Cannot be determined.
d) Will be at a discount.
2. When a bond is downgraded, the yield of the bond will decrease.
a) True
b) False
3. Agencies such as Standard's & Poor rate bonds based on their default risk premium.
a) True
b) False
An AAA rated bond is of lower quality than a BAA rated bond
a) True
b) False
4. The capital gains yield on a bond that trades at a premium is
a) above 10%
b) negative
c) zero
d) positive
5. If interest rates did not change from now until this bond's maturity,a bond with a yield of 7% and a coupon rate of 8% would:
a) trade at a premium right now. Its price would gradually decline until it reaches par at maturity.
b) trade at a discount right now. Its price would gradually increase until it reaches par at maturity.
c) trade at par.
d) it would not be trading at all since the coupon does not equal the yield in the market.
PLEASE ANSWER ALL 5 THANK YOU
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