Define relationship between bond''s market price and its ytm, Financial Management

Assignment Help:

What is the relationship between a bond's market price and its promised yield to maturity?  Explain.

A bond's market price relies on its yield to maturity abbreviated as YTM.  While a bond has a YTM greater as compared to its coupon rate, it sells at a discount from its face value.  While the YTM is equal to the coupon rate and market price equals the face value.  While the YTM is less as compared to the coupon rate, the bond sells at a premium over face value.


Related Discussions:- Define relationship between bond''s market price and its ytm

Determine the purchasing in leaminger plc, b) Each $1 of outlay prior to 3...

b) Each $1 of outlay prior to 31 December 2003 would mean a loss in NPV on the alternative project of $0·20. There is so an opportunity cost of using funds in 2002. Purchasing

Differentiate global and american depository receipts, What is Global Depos...

What is Global Depository Receipts American / Global Depository Receipts (ADRs/ GDRs) Equity shares which are offered in international markets to international investors a

Assembling the divestiture team, Assembling the Divestiture Team: Dives...

Assembling the Divestiture Team: Divestment of a business requires a team of functional experts under the direction of an experienced project manager. The first and foremost ac

Evaluate net realisable value of assets, Q. Evaluate Net realisable value o...

Q. Evaluate Net realisable value of assets? Valuation (i) Method 1 - Net assets according to the statement of financial position Value = $295000 Reservation N

Bond's capital gain yield, A 10-year, 12% semi-yearly coupon bond with a pa...

A 10-year, 12% semi-yearly coupon bond with a par value of $1,000 may be called in 4 years at a call price of $1,050. The bond sells for $1,050. (Suppose that the bond has just bee

Corporate governance features, Corporate Governance features Corporat...

Corporate Governance features Corporate compliance: The BOD should make sure that corporation obeys with all related laws, governance practices, regulations, accounting an

How are libor, Q. How are LIBOR, TIBOR and EURIBOR determined? London I...

Q. How are LIBOR, TIBOR and EURIBOR determined? London Inter Bank Offered rate ( LIBOR) and is the rate of interest at which banks offer funds to other banks in marketable siz

Impact of the yield level in bonds, Different bonds trade at differen...

Different bonds trade at different yields though the coupon rate, maturity, and embedded options are same for them. Assuming that all the other bond characteristi

Genital and reproductive function, Genital and Reproductive Function: ...

Genital and Reproductive Function: J.Y. is a 43-year-old woman who has detected a lump in the upper outer quadrant of her left breast while performing her monthly self-breast

Extendible reset bonds, Extendible reset bonds are floaters in which ...

Extendible reset bonds are floaters in which the issuer is required to reset the coupon rate so that the issue will trade at a predetermined price (usually above

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd