1. Define the following types of bonds: a. Catastrophe bond b. Eurobond c. Zero-coupon bond. d....
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1. Define the following types of bonds: a. Catastrophe bond b. Eurobond c. Zero-coupon bond. d. Samurai bond e. Junk bond f. Convertible bond g. Serial bond h. Equipment obligation bond i. Original-issue discount bond. j. Indexed bond k. Callable bond 1. Puttable bond 2. Two bonds have identical times to maturity and coupon rates. One is callable at 105, the other at 110. Which should have the higher yield to maturity? Why? 3. The stated yield to maturity and realized compound yield to maturity of a (default-free) zero-coupon bond are always equal. Why? 4. Why do bond prices go down when interest rates go up? Don't bond lenders like to receive high interest rates? 5. A bond with an annual coupon rate of 4.8% sells for $970. What is the bond's current yield? 6. Which security has a higher effective annual interest rate? a. A 3-month T-bill selling at $97,645 with par value $100,000. b. A coupon bond selling at par and paying a 10% coupon semiannually. 1. Define the following types of bonds: a. Catastrophe bond b. Eurobond c. Zero-coupon bond. d. Samurai bond e. Junk bond f. Convertible bond g. Serial bond h. Equipment obligation bond i. Original-issue discount bond. j. Indexed bond k. Callable bond 1. Puttable bond 2. Two bonds have identical times to maturity and coupon rates. One is callable at 105, the other at 110. Which should have the higher yield to maturity? Why? 3. The stated yield to maturity and realized compound yield to maturity of a (default-free) zero-coupon bond are always equal. Why? 4. Why do bond prices go down when interest rates go up? Don't bond lenders like to receive high interest rates? 5. A bond with an annual coupon rate of 4.8% sells for $970. What is the bond's current yield? 6. Which security has a higher effective annual interest rate? a. A 3-month T-bill selling at $97,645 with par value $100,000. b. A coupon bond selling at par and paying a 10% coupon semiannually.
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