HELPPP Bond prices are determined by which of the following?
Term to maturity multiplied by the bond rating ratio
b. None of the choices provided here are true
c. The future value of the face value
d. The present value of the coupon payments
e. The present value of the coupon payments and face value
Which of the following is not true of bonds?
1. They are a means for companies to raise capital
2. They are typically safer than stocks
3. They make a bond purchaser a creditor to the company
4. All of the above are true
5. They have a finite life cycle
Which of the following types of bonds is sold at a discount from face and does not pay coupon payments?
a. Regular bonds
b. Aggregate bonds
c. Passive bonds
e. None of the choices provided here are true
THE THIRD question could be in MULTIPLE answers!
- JoeyVLv 79 years agoFavorite Answer
Riham has this. I dunno what MSC is thinking that the face value of the bond does not determine its value. The value of a bond is the PV of its coupons and its face value where the discount rate properly accounts for risk.
- mscLv 69 years ago
1. The price of a bond is determined by the market, based on the attractiveness of the interest rate (coupon) and the creditworthiness of the bond issuer. A is false because it doesn't take the coupon into account. C and E are false because face value is not a factor at all. I suppose D could be true, if by "value" they mean attractiveness compared to other bonds
2. All answers are true.
3. Zeros (zero-coupon bonds). Instead of paying an interest rate, they offer a capital gain at the end of the term.
- 9 years ago