Visitor $0.00 Login or Register

Fight Finance

Courses Tags Random All Recent Scores

Scores
keithphw	$6,001.61
an4_bolt	$4,106.43
Visitor	$442.43
Visitor	$280.00
Visitor	$260.00
Visitor	$240.00
SGDMGSM	$183.46
Visitor	$157.00
Visitor	$129.43
Visitor	$129.43
Visitor	$120.00
Visitor	$106.43
Visitor	$100.00
Visitor	$88.61
Soo	$75.33
Visitor	$62.09
Visitor	$60.00
Visitor	$60.00
Visitor	$46.09
Visitor	$43.81

Question 207 income and capital returns, bond pricing, coupon rate, no explanation

For a bond that pays fixed semi-annual coupons, how is the annual coupon rate defined, and how is the bond's annual income yield from time 0 to 1 defined mathematically?

Let: ##P_0## be the bond price now,

##F_T## be the bond's face value,

##T## be the bond's maturity in years,

##r_\text{total}## be the bond's total yield,

##r_\text{income}## be the bond's income yield,

##r_\text{capital}## be the bond's capital yield, and

##C_t## be the bond's coupon at time t in years. So ##C_{0.5}## is the coupon in 6 months, ##C_1## is the coupon in 1 year, and so on.

Question 770 expected and historical returns, income and capital returns, coupon rate, bond pricing, no explanation

Which of the following statements is NOT correct? Assume that all things remain equal. So for example, don't assume that just because a company's dividends and profit rise that its required return will also rise, assume the required return stays the same.