Bond Valuation and Yield Calculations Quiz

Yield to maturity represents the annualized return from holding the bond until maturity.

Yield to maturity represents the rate of return earned on a bond if held until maturity.

Coupon rate represents the annual interest payment made by a bond issuer to the bondholder, expressed as a percentage of face value.

Holding period refers to the duration between purchasing a bond and its maturity date.

Coupon rate determines the timing and amount of periodic interest payments made by a bond issuer to the bondholder.

Present value of bond equals coupon payment divided by one plus the discount rate raised to the number of periods.

Rising interest rates lead to a decrease in the value of existing bonds.

Bonds with longer maturity periods generally have higher yields to maturity.

Current yield is calculated as the annual interest payment divided by the current market price, expressed as a percentage.

Zero-coupon bonds do not pay periodic interest but are issued at a discount to face value.

Bond prices move inversely with changes in interest rates.

Bond price and coupon rate move in opposite directions.

Yield to maturity is the primary factor influencing bond price volatility.

Bonds issued by higher credit-rated entities typically offer lower yields to maturity.

Bond coupon rates are primarily determined by prevailing market interest rates at the time of issuance.

Various factors, including credit risk, liquidity risk, and market conditions, influence the risk premium of a bond.

Yield to maturity is calculated as the percentage return on a bond based on its current market price and face value.