Which of the following is true as it relates to bonds?Multiple ChoiceThe market interest rate is used to calculate the cash interest payments produced by the bond and the yield is used to determine the present value of a bondThe yield is used to calculate the cash interest payments produced by the bond and the contract interest rate is used to determine the present value of a bondThe yield is used to determine the present value of a bond and the contract rate is used to calculate the cash interest paymentsNone of these choices are correctThe coupon rate is used to calculate the cash interest payments produced by the bond and the nominal rate is used to determine the present value of a bond

Which one of the following statements is NOT true?Group of answer choicesThe yield to maturity of a bond is the discount rate that makes the present value of the coupon and principal payments equal to the price of the bond.A bond's yield to maturity changes daily as interest rates increase or decrease.The realised yield is the yield that the investor earns if the bond is held to maturity, and all the coupon and principal payments are made as promised.The yield to maturity is the yield that the investor earns if the bond is held to maturity, and all the coupon and principal payments are made as promised.The term structure of interest rates shows the relationship between the yield to maturity and time to maturity.

If the stated rate of a bond is higher than the market interest rate:Group of answer choicesThe stated rate will increaseThe bond will trade at a discountThe bond will be priced above the face valueThe coupon payment will increase

Which one of the following statements about bonds is correct?Group of answer choicesThe yield on a bond for a bond investor is generally a fixed rate.Bond prices vary inversely with interest rates.Most bonds pay interest annually.Bond coupon rates vary with interest rates.

A bond that is held to maturity A. will necessarily have a yield to maturity equal to the coupon rate. B. will necessarily earn the yield to maturity at the time of purchase. C. may earn more or less that its yield to maturity at the time of purchase because the rate at which coupons can be reinvested may change. D. will earn the yield to maturity at the date of maturity.

Bond A has 5 years maturity with  7 percent coupon rate, Bond B also has 5 years maturity but the coupon rate is 10 percent.  Both bonds are exposed to the same market interest rates, hence the same required rate of returns.  If the market interest rates of both bonds decrease by the same amount, which of the following statements is most correct?Group of answer choicesBoth bonds will increase in price, Bond A  will have a greater percentage increase in price than Bond B.Both bonds will increase  in price, Bond B will have a greater percentage increase in price than Bond A.The prices of both bonds will increase by the same amount.Both bonds will decline in price, Bond A will have a greater percentage decline in price than Bond B.