Given your computation and conclusions, which of the following statements is true? A bond should trade at a par when the coupon rate is greater than Jacksons required return.

When the coupon rate is greater than Jacksons required return, the bonds intrinsic value will be less than its par value.

When the coupon rate is less than Jacksons required return, the bond should trade at a premium.

When the coupon rate is less than Jacksons required return, the bond should trade at a discount.

2. Bonds often pay a coupon twice a year. For the valuation of bonds that make semiannual payments, the number of periods doubles, whereas the amount of cash flow decreases by half. Using the values of cash flows and number of periods, the valuation model is adjusted accordingly.

Assume that a $1,000,000 par value, semiannual coupon U.S. Treasury note with four years to maturity (YTM) has a coupon rate of 3%. The yield to maturity of the bond is 10.00%. Using this information and ignoring the other costs involved, the value of the Treasury note is

A. 487,486.16

B.657,719.42

C.773,787.55

D.928,545.06

The T-note described is currently selling at a (Premium or Discount) Assuming that interest rates remain constant over the life of the note, its price should be expected to ( Increase or Decrease) as the T-note approaches maturity. When valuing a semiannual coupon bond, the time period (N) in the present value formula is assumed to have a value of (12 months, 4 months, annual, 6month) period

Intrinsic Value + + + + + + (1+0) (14cc (1+) (11) (1+0) Complete the following table by identifying the appropriate corresponding variables used in the equation. Unknown Variable Value Variable Name Bond's semiannual coupon payment Bond's par value $30.00 B $1,000 Semiannual required return 3.00% to expect that Jackson's potential bond investment will exhibit an intrinsic value equal to Based on this equation and the data, it is reasonable $1,000 Now, consider the situation in which Jackson wants to earn a return of 15%, but the bond being considered for purchase offers a coupon rate of 12%. Again, assume that the bond pays semiannual interest payments and has three years to maturity. If you round the bond's intrinsic value to the nearest whole dollar, then its intrinsic value of $930 is greater than its par value, so that the bond is trading at a premium equal to par $1,116 llo k $1,209 greater than a discount $930 less than a premium $ 744