A zero-coupon bond is a bond that ________. a. Has no value b. Has no periodic coupon
Question:
A zero-coupon bond is a bond that ________.
a. Has no value
b. Has no periodic coupon payments
c. Has been rated below investment grade
d. Both A and C
Step by Step Answer:
d Both A and C AI A zero...View the full answer
Related Video
Bond valuation is the process of determining the worth of a bond. It is based on the present value of the bond\'s future cash flows, which include coupon payments and the return of the bond\'s face value (or \"principal\") at maturity. The discount rate used in the calculation is directly tied to prevailing interest rates, and a rise in interest rates will decrease the present value of the bond and thus lower its price. Conversely, a fall in interest rates will increase the present value of the bond and raise its price. Interest rates serve as a benchmark for determining the value of a bond, as they determine the discount rate used in the bond valuation calculation. The most commonly used measure of interest rates is the yield to maturity (YTM), which represents the internal rate of return of an investment in a bond if the investor holds the bond until maturity and receives all scheduled payments. Yield to maturity is a function of the coupon rate, the current market price of the bond, the face value of the bond, and the number of years remaining until maturity. By comparing the yield to maturity of a bond to prevailing market interest rates, an investor can assess the relative value of the bond.
Students also viewed these Business questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Homer Simpson is considering three investment options. Option 1 involves investing in a zero coupon bond for two years. Option 2 involves investing in a five-year zero coupon bond and then selling...
-
An investment bank purchased a Treasury bond at a government bond auction today. This bond has exactly 10 years to maturity and will pay annual coupons of 1% per annum. All: bonds in this issue (i.e....
-
Power Company acquired 80 percent of Solar Company's outstanding common stock for $200,000 cash on January 2, 2021. The two companies continued to operate as separate entities after the combination....
-
For df values beyond the range of Appendix Table A.3, chi square cutoffs can be approximated by using a formula based on cutoffs from the standard normal pdf, f Z (z). Define 2 p,n and z p so that...
-
Megga Brands, Inc. borrowed $ 1,500,000 from Telcity Bank. The note payable has a term of 15 years and carries a 4% coupon interest. Due to an inadequate credit score, Megga Brands agreed to several...
-
The scaling analysis for the mass-transfer boundary-layer thickness is parallel to that for heat transfer analysis. Use the same method to show that \(\Delta\) is proportional to \(S c^{-1 / 3}\) for...
-
Kasik Co. budgeted the following cash receipts and cash disbursements for the first three months of next year. According to a credit agreement with the companys bank, Kasik promises to have a minimum...
-
labour cost. Last year, the company sold 30,000 of these balls, with the following results: Sales (30,000 balls) $750,000 Variable expenses Contribution margin 450,000 300,000 Fixed expenses...
-
On-Campus Health is the infirmary located on the campus of the University of Denver. Recordkeep- ing at the infirmary?s pharmacy, although meticulous and professional, is inefficient. Maintaining the...
-
A Cameron Corp. bond has a $1,000 par value, a 5 percent coupon rate paid semiannually, and nine years until maturity. If similar investments yield 6%, what is the current value of Cameron Corp....
-
You are considering adding a $1,000, 25-year bond to your portfolio. It has a coupon rate of 8%, which is paid annually, and your required return is 10%. What is the current price of the investment?
-
In the campaign to become the GOP candidate for president in 2012, Ron Paul suggested returning the U.S. economy to a gold standard. Do you agree with him? Are there any circumstances under which a...
-
import javax.swing.JOptionPane; public class GUI_DropDownList { public static void main(String[] args) { int answer=0; int x=JOptionPane.showConfirmDialog(null,"Do you want to continue...", "OPTION",...
-
Avery, age 42, is unmarried and has two qualifying dependents for whom she maintains a household for the entire year. Avery has an adjusted gross income of $75,000 and uses the standard deduction....
-
Using the AICPA Code of Professional Conduct Links to an external site. describe how this was either applied, misapplied, or completely ignored. Using the COSO Internal ControlIntegrated Framework...
-
Company A has the following data: Prime costs are 180% of direct materials costs. DM costs for year 20xx are $ 100,000. The company had estimated the overhead costs to be $400,000 and the estimated...
-
suppose your company shipped product on december 12. it was reveived by the customers and placed in inventory on december 31,2024. but not signed off on until january 2, 2025.does SAB 101 say that...
-
Castleton Company has analyzed the costs of producing and selling 5,000 units of its only product to be as follows: Direct materials .......................................................... $60,000...
-
Figure displays a 12.0 V battery 3 four uncharged capacitors of capacitances C1 = 4.00F, C2 = 6.00F, and C3 = 3.00F. The switch is thrown to the left side until capacitor 1 is fully charged. Then the...
-
Discuss the future growth and nature of wholesaling if chains, scrambled merchandising, and the Internet continue to become more important. How will wholesalers have to adjust their mixes? Will...
-
Art Glass Productions, a producer of decorative glass gift items, wants to expand into a new territory. Ma n agers at Art Glass know that unit sales in the new territory will be affected by consumer...
-
In your own words, discuss the integrated marketing communications concept. Explain what its emphasis on consistent and complete messages implies with respect to promotion blends.
-
Consider a growing annuity that makes semiannual payments, and whose first payment is 50 dollars. The growing annuity payment grows by 2% every six months, and the payments go on for 10 years. Find...
-
Consider the following two stocks: Stock A Stock B Expected Return 0.18 0.13 Standard Deviation 0.45 0.20 Beta 0.49 1.27 Correlation 0.4 A. If an investor invests 40% of her money in Stock A and the...
-
An investor is given the following information about two stocks returns. X Stock 1 Stock 2 Mean 0.09 0.13 0.15 0.21 Standard deviation Note: Use numbers only in your answer without any comas,...
Study smarter with the SolutionInn App