Ask Question
BusinessBusiness
10 February, 23:51

If a bond sells at a high premium, then which of the following relationships hold true? (P0 represents the price of a bond and YTM is the bond's yield to maturity.) Select one: (A) P0 the coupon rate. (B) P0 > par and YTM > the coupon rate. (C) P0 > par and YTM < the coupon rate. (D) P0 < par and YTM < the coupon rate.

+3
Answers (1)
  1. 11 February, 00:25
    0
    (C) P0> par and YTM< the coupon rate

    Explanation:

    In case of a bond wherein coupon rate of interest payments is higher than it's discounting rate or the yield to maturity (ytm), such bonds are priced at a premium.

    In such cases, present value of the bond which is here denoted by P0 is higher than it's face value.

    Value of a bond is the sum total of it's present value of it's future stream of coupon payments as well as it's redemption value, both discounted at the rate of it's yield to maturity (ytm).
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “If a bond sells at a high premium, then which of the following relationships hold true? (P0 represents the price of a bond and YTM is the ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
While a television news reporter might state that "today the fed raised the federal funds rate from 1 percent to 1.25 percent," a more precise account of the fed's action would be as follows:?
Answers (1)
Petras Company engaged in the following transactions during 2012, its first year in operations: (Assume all transactions are cash transactions) 1) Acquired $950 cash from the issue of common stock. 2) Borrowed $420 from a bank.
Answers (1)
Rothstein Corp. had the same capital structure in 2021 and 2022, consisting of the following: Preferred stock, $12 par, 5% cumulative, 20,000 shares issued and outstanding$240,000 Common stock, $6 par, 250,000 shares issued and outstanding 1,500,000
Answers (1)
Two business companies dispute the quality of goods delivered by the seller and the price agreed to by the buter.
Answers (1)
Should schools raise money by selling candy and sugary soft drinks to students
Answers (1)
New Questions in Business
Which one of the following is the most widely used source of retirement income? IRAs Keogh plans company pension plans Social Security
Answers (1)
Martha bought a share of hippy company when it was $10 per share and sold it for $110 per share. By selling her stock, Martha experienced a? -$100 capital gain -$110 capital gain -$100 dividend -$110 dividend homework and confused
Answers (1)
In which of the following circumstances may auditors issue the standard (unmodified) report on the entity's financial statements? A.
Answers (1)
What is the most common type of network used in businesses?
Answers (1)
The practice of airing a off-net rerun program daily at the same time is called:
Answers (1)
Home » Business » If a bond sells at a high premium, then which of the following relationships hold true? (P0 represents the price of a bond and YTM is the bond's yield to maturity.) Select one: (A) P0 the coupon rate. (B) P0 > par and YTM > the coupon rate.
Sign Up Forgot Password?