A bond’s face value is 1,000 dollars. Its maturity is three years, and every year it pays 100 dollars coupon. The current interest rate is 10% for the following three years. Then the present value of this bond will be______
A. 1100
B. 1000
C. 950
D. 900
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The value of a bond depends on___________________ (1)the bond's coupon (2)the maturity date (3)possible interest rates earned on competitive bonds
A. (1) and(2)
B. (1)and(3)
C. (2)and(3)
D. (1), (2), and(3)
If a bond is selling for a discount, that implies______________ (1)interest rates have fallen (2)interest rates have risen (3)the yield to maturity exceeds the current yield (4)the yield to maturity is less than the current yield
A. (1) and (3)
B. (1) and (4)
C. (2) and (3)
D. (2) and (4)
Which of the following is not true if interest rates rise? _______
A. Existing bonds may be called back.
B. Prices of existing bonds fall.
C. The yield to maturity rises more than the current yield.
D. The market price of a zero coupon bond falls.
If interest rates in general rise,________
A. the prices of existing bonds rise
B. the prices of existing bonds fall
C. the prices of matured bonds rise
D. the prices of matured bonds fall