1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
zvonat [6]
3 years ago
5

A 10-year bond pays an annual coupon, its YTM is 8%, and it currently trades at a premium. Which of the following statements is

CORRECT? a. The bond's current yield is less than 8%. b. If the yield to maturity remains at 8%, then the bond's price will decline over the next year. c. The bond's coupon rate is less than 8%. d. If the yield to maturity increases, then the bond's price will increase. e. If the yield to maturity remains at 8%, then the bond's price will remain constant over the next year.
Business
1 answer:
cricket20 [7]3 years ago
8 0

Answer:

If the yield to maturity remains at 8%, then the bond's price will decline over the next year.

Explanation:

When the bonds sells at a premium it means that the coupon payment is greater than the yield to maturity, which means that the income generated by the bond is greater than return required by the investor and because of this the bond sells at a premium because the investor is willing to pay more for the bond as it offers more income than its required rate of return. With a premium the bond price increases to a point where the coupon and required return become equal. When the bond has 10 years to maturity it means that it will give 10 equal payments to the investor which will be greater than the investors required return therefore the investor will be willing to pay a higher price for the bond, as the maturity decreases the number of payments which will be higher than the required return also decrease, so for example if there are 5 years to maturity then the bond will pay 5 payments that are greater than the required return so the investor will be paying a lower premium compared to when he was getting 10 payments that payed more than his required return.

You might be interested in
When choosing between mutually exclusive projects, what is the best method to use?
KIM [24]

Answer:

Option C. The highest NPV is always the best option.

Explanation:

The reason is that IRR assumes that the reinvestment rate is also at IRR which is not a realistic assumption. The Net Present Value resolves this as it assumes that the reinvestment rate is cost of capital and hence is more better than IRR to appraise the project.

The decision rule in the Net present value method is that the project which has higher positive Net present value is regarded as best project among two mutually exclusive projects.

7 0
3 years ago
Franz Tress, a cosmetics manufacturing company, offers an annual subscription plan to its customers where the customers have the
aksik [14]

Answer:

The correct answer is letter "A": the loyalty loop.

Explanation:

The loyalty loop describes a process of retaining customers instead of attracting new consumers. Before the purchase takes place, the loyalty loop summarizes the purchasing process has three steps: <em>enjoy, consider, </em>and <em>evaluate</em>. After the purchase, the process involves three steps: <em>enjoy, advocate, </em>and <em>bond</em>. Both processes end up in a buy but the second process ensures the customer develops a <em>commitment </em>with the brand and is unlikely to look for competitors' products.

3 0
3 years ago
If a company's scope is too big, what is likely to happen?
Sever21 [200]
If a company's scope is too big then the company will lose its direction and focus.
5 0
3 years ago
Read 2 more answers
What is unemployment insurance fund
MArishka [77]
Salutations!

What is unemployment insurance fund?

Unemployment insurance fund is a short term holiday, or consolation where workers do not work due to personal issues, such as: illness, family cases etc.

Hope I helped :D
3 0
3 years ago
"Americans in this decade are less likely than in the prior decade to say they want to lose weight, with the average dropping fr
Scilla [17]

Answer a. Estimate a population proportion.

Explanation:

A population proportion denotes a specific attribute of a population measured in percentage, the above analysis is on losing weight by the populace.

A mean only refers to the average of the population without reference to a particular quality.

The analysis is not testing a claim but it's only making reference to earlier findings on the population. A claim would have given us a specific quality which the population has been predicted or established to adhere to.

4 0
3 years ago
Other questions:
  • "be sure to identify any additional bases underlying your forecast and any assumptions."
    10·1 answer
  • Suppose that a negative externality is created by the production of good X. Which of the following statements is correct?
    11·1 answer
  • Which of the following scenarios describes an offer?a.Raoul asks Wendy if she would be willing to sell her first-edition copy of
    9·1 answer
  • Hula Products has reintroduced the hula hoop to the world and faces a growing demand for its product in two distinct markets: th
    14·1 answer
  • Lilly's team had trouble keeping up with all the changes being made to the
    15·2 answers
  • Question 12 When you get a vaccine, it benefits others because you can't get them sick. If left to the free market, the socially
    12·1 answer
  • If the quantity demanded for a good rises as the price falls, then the curve representing this relationship will be:
    5·1 answer
  • Luxury Swiss chalet hotel general manager reported to her owner that the hotels occupancy index for calendar year 2019 was 1.25.
    9·1 answer
  • Which type of training would be considered vocational training?
    9·2 answers
  • Some economists believe that a sales tax increase affects which group the MOST?
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!