A bound which has a yield to maturity has than its coupon interest rate will sel

Question

A bound which has a yield to maturity has than its coupon interest rate will sell for a price below par. At par above pa. not enough information A 10-year maturity bond pays 11% coupon has on a face value of $1,000. If required rate of return on similar bonds is 10%. What is the market value of the bond? Use annual analysis. $1,000 $1,061 the longer the time to maturity: the greater the price increase from an increase in interest rates. The less the price increase from an increase in interest rates. The greater the price increase from a decrease in interest rates. The less the price decrease from a decrease in interest rates.

Explanation / Answer

6 The correct option is C. Above par YTM = Coupon+ FV-BV/n// FV+BV/2 Therefore having less yield to maturity will be selling at above par 7 YTM = Coupon+ FV-BV/n// FV+BV/2 .10 = 11+1000-x/10//1000+x/2 .10= 110+1000-x/5000+5x 500+.5x = 1110-x 8 B. The less the price increase from an increase in interest rates

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.