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Please answer the following questions. Are the following bonds issued at par, premium, or discount? Discount, premium or par Coupon rate is 3%; yield is
Please answer the following questions.
- Are the following bonds issued at par, premium, or discount?
| Discount, premium or par |
Coupon rate is 3%; yield is 4% |
|
Annual coupon of $100; yield to maturity of 9% |
|
Semi-annual coupon of $40; yield of 8% |
|
- Bond A sells for $990 and Bond B sells for $1010. Both bonds have a yield of 4%. Which one has the higher coupon? (Please answer A, B or A=B.)
- Bond A is a par bond and Bond B is a discount bond. They are of the same riks. Which one has the higher coupon? (Please answer A, B or A=B.)
- Bonds of the same risk must have the same after-tax yield. (True or False.)
- A municipal bond should offer a higher yield to maturity than a similar corporate bond because of the tax advantage. (True or False.)
- A bond with semi-annual payments of $25 has a higher coupon rate than a bond with annual payment of $40. (True or False.)
- A bond with semi-annual payments of $25 has a higher coupon rate than a bond with annual payment of $50. (True or False.)
- If you pay a very high tax rate you would most likely prefer a municipal bond over a similar corporate bond. (True or False.)
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