Coupon rate of a bond
[DOC File]CHAPTER 7
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This bond has a yearly coupon payment of $180 and a face value of $3,000. What is the coupon rate of this bond? What is its yield to maturity? On January 1, 1999 Sue sells her bond to Jack. The night before Jack has read in the Wall Street Journal that the current yield to maturity of 2 …
[DOC File]1
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Bond price fluctuations (volatility) and bond coupon rates are inversely related. Implications A decline (rise) in interest rates will cause a rise (decline) in bond prices, with the most volatility in bond prices occurring in longer maturity bonds and bonds with low coupons.
[DOC File]Bond Yields and Prices
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FIN350 In Class Work No. 2---Bond& Interest Rate. 1. The discount rate that makes the present value of a bond’s payments equal to its price is termed the: A) capital gain yield. B) yield to maturity. C) current yield. D) coupon rate. 2. The coupon rate of a bond equals: A) its yield to maturity. B) coupon as a percentage of its face value.
[DOC File]Econ 111 – Fall 1998
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The bond pays coupons of 800 annually. The bond is bought to yield 8% annually. Calculate the accumulation of discount in the 4th coupon. 0 588 635 686 741 Chris buys a bond that is redeemable for its par value of 5,000 after 20 years. The bond has a coupon rate of 6% convertible semi-annually. The bond is bought to yield 5% semi-annually.
[DOC File]Bond Market Interest Rates
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9. What happens to the coupon rate of a bond that pays $80 annually in interest if interest rates change from 9% to 10%? A) The coupon rate increases to 10%. B) The coupon rate remains at 9%. C) The coupon rate remains at 8%. D) The coupon rate decreases to 8%. Answer: C. 10. When the yield curve is upward-sloping, then:
[DOC File]Bonds, Instructor's Manual
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Bond $10,000 Equity $1,000. Total Assets $11,000 Total Liabilities and Equity $11,000. The bond has a 10-year maturity, a fixed-rate coupon of 10 percent paid at the end of each year, and a par value of $10,000. The certificate of deposit has a 1-year maturity and a 6 percent fixed rate of interest. The FI expects no additional asset growth. a.
Coupon Rate
When current interest rates are greater than a bond's coupon rate, the bond will sell at a discount (less than its face value). When interest rates are less than the coupon rate, the bond can be sold at a premium (for a profit). Let's say you have a 10-year, $5,000 bond with a coupon rate of 5%. If interest rates go up, new bond issues might ...
[DOC File]1 - Purdue University
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A bond is sold at $923.14 (below its par value of $1,000). The bond matures in 15 years and has a 10-percent yield, expressed as a stated annual interest rate, compounded semiannually. What is the coupon rate on the bond if the coupon is paid semiannually? The next payment occurs six …
[DOC File]Sample midterm
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Bond coupon rate Answer: d Diff: M. The current price of a 10-year, $1,000 par value bond is $1,158.91. Interest on this bond is paid every six months, and the nominal annual yield is 14 percent. Given these facts, what is the annual coupon rate on this bond? a. 10%. b. 12%. c. 14%. d. 17%. e. 21%. Tough: Bond value Answer: d Diff: T
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