If a bond with a face value of $1000 has a coupon rate of 10% annually and the market currently requires a yield of 12% for similar bonds, this bond will sell at
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a premium |
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a discount |
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par ($1000) |
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cannot be determined |
Interest rates have fallen. You have the opportunity to refinance your mortgage at 7% compounded monthly. Refinancing will cost $4,000, but will save you $143.07 a month in interest payments. You plan to live in your home for another 3 years. Is refinancing worthwhile?
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Yes, the NPV is + $505.50. |
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No, the NPV is - $505.50. |
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Yes, the NPV is + $633.54. |
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No, the NPV is - $633.54. |