Question: Round Dot Inns is preparing a bond offering with a coupon rate of 6 percent, paid semiannually, and a face value of $ 1 ,
Round Dot Inns is preparing a bond offering with a coupon rate of percent, paid semiannually, and a face value of $ The bonds will mature in years and will be sold at par. Given this, which one of the following statements is correct?
Group of answer choices
The bonds will sell at a premium if the market rate is percent.
The bonds will become discount bonds if the market rate of interest declines.
The bonds will pay interest payments of $ each.
The bonds will initially sell for $ each
The final payment will be in the amount of $
Group of answer choices
Decreasing the time to maturity increases the price of a discount bond, all else constant.
The coupon rate exceeds the current yield when a bond sells at a discount.
The call price must equal the par value.
An increase in market rates increases the market price of a bond.
Increasing the coupon rate decreases the current yield, all else constant.
Step by Step Solution
There are 3 Steps involved in it
1 Expert Approved Answer
Step: 1 Unlock
Question Has Been Solved by an Expert!
Get step-by-step solutions from verified subject matter experts
Step: 2 Unlock
Step: 3 Unlock
