1. What is the difference between the coupon rate and the YTM? 2. How does a bond...
Question:
1. What is the difference between the coupon rate and the YTM?
2. How does a bond issuer decide on the coupon rate to set on its bonds?
3. What is the relationship between bond prices and its YTM?
4. What is a discount bond? a premium bond?
5. All else remaining same, which has more interest rate risk, a long-term bond or a short-term bond?
6. All else remaining same, which has more interest rate risk, a low-coupon bond or a high-coupon bond?
7. A Bond is currently selling for $940 and has a coupon rate of 7%. Should the YTM be higher or lower than 7%?
8. A Bond is currently selling for $1040 and has a coupon rate of 8%. Should the YTM be higher or lower than 8%?
CouponA coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...
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Corporate Finance
ISBN: 978-0071339575
7th Canadian Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Gordon Ro