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41.Which ONE of the following statements true? a.Zero coupon bonds have

Question : 41.Which ONE of the following statements true? a.Zero coupon bonds have : 1400443

 

41.Which ONE of the following statements is true?

a.Zero coupon bonds have no coupon payments over its life and only offer a single payment at maturity.

b.Zero coupon bonds sell well below their face value (at a deep discount) because they offer no coupons.

c.The most frequent and regular issuer of zero coupon securities is the U.S. Treasury Department.

d.All of the above are true.

42.Which ONE of the following statements is true?

a.To secure the conversion option on a bond, bondholders would be willing to pay a premium.

b.The conversion ratio is set so that the firm’s stock price must appreciate 15 to 20 percent before it is profitable to convert bonds into equity.

c.Convertible bonds can be converted into shares of common stock at some predetermined ratio at the discretion of the bondholder.

d.All of the above are true.

43.Which one of the following statements about bond price is NOT true?

a.To compute a bond’s price, one needs to calculate the present value of the bond’s expected cash flows.

b.The value, or price, of any asset is the future value of its cash flows.

c.The required rate of return, or discount rate, for a bond is the market interest rate called the bond’s yield to maturity

d.Estimate the expected future cash flows using the coupons that the bond will pay and the maturity value to be received.

44.If a bond’s coupon rate is equal to the market rate, then the bond will sell

a.at a price equal to its face value.

b.at a price greater than its face value.

c.at a price less than its face value.

d.None of the above are true.

45.Bonds sell at a discount off the par value when market rates for similar bonds are

a.less than the bond’s coupon rate.

b.greater than the bond’s coupon rate.

c.equal to the bond’s coupon rate.

d.Market rates are irrelevant in determining a bond’s price.

46.Bonds sell at a premium over the par value when market rates for similar bonds are

a.less than the bond’s coupon rate.

b.greater than the bond’s coupon rate.

c.equal to the bond’s coupon rate.

d.Market rates are irrelevant in determining a bond’s price.

47.In calculating the current price of a bond paying semiannual coupons, one needs to

a.use double the number of payments.

b.use half the annual coupon.

c.use half the annual rate as the discount rate.

d.All of the above need to be done.

48.Which one of the following statements about zero coupon bonds is NOT true?

a.Zero coupon bonds have no coupon payments but promise a single payment at maturity.

b.Zero coupon bonds must sell for less than similar bonds that make periodic coupon payments.

c.Zero coupon bonds make coupon payments but no principal payment at maturity.

d.All of the above statements are true.

49.Which one of the following statements is NOT true?

a.The yield to maturity of a bond is the discount rate that makes the present value of the coupon and principal payments equal to the price of the bond.

b.It is the yield that the investor earns if the bond is held to maturity, and all the coupon and principal payments are made as promised.

c.A bond’s yield to maturity changes daily as interest rates increase or decrease.

d.All of the above are true.

50.The yield to maturity of a bond is the discount rate that makes the present value of the coupon and principal payments

a.exceed the price of the bond.

b.equal to zero.

c.equal to the price of the bond.

d.less than the price of the bond.

 

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