Quiz Ch 06 – Components of Bond Value Impacted by Interest Rate Changes
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
Which element of a bond’s value is affected when interest rates undergo changes?
Which element of a bond’s value is affected when interest rates undergo changes?
In the context of bond yields, which component is present in the yield of a bond with a low credit rating but absent in the yield of a U.S. Treasury bond when both are trading at a premium?
What does a “convertible bond” offer the option to convert into?
What is the coupon rate of a bond equal to?
What is the most probable distinction between a CCC-rated bond and a BBB-rated bond?
What happens to the bond as the coupon rate increases?
What should investors anticipate when buying bonds with lower credit ratings?
What could be a potential reason for the increase in the market price of a bond with a 12-year maturity and an 8% annual coupon rate that occurred yesterday?
What is the most plausible event that likely took place while the investor held the fixed-coupon bond, which was initially bought when the yield to maturity was 6.9% and later sold for a total return of 7.1%?
What factors contribute to bonds being sold at a premium?