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Additional Bond Courses Intermediate: Bond Discounts and Premiums

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1.
The amount of money you will make on a bond if you hold it until maturity is called yield-to-maturity.
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True. You only get this amount if you keep the bond in your possession until the day it matures.
2.
The amount of a bond's original issue discount interest can be found on IRS Form 1099-OID.
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True. Form 1099-OID exists just for this purpose.
3.
Buying a discount bond means you will receive less than the bond's face value at maturity.
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False. You will always receive the bond's face value at maturity, but you will buy it for less than the face value.
4.
Zero coupon bonds are sold at substantial discounts.
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True. The discounts replace coupons.
5.
When interest rates go up, _______.
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New bonds and older bonds have equal yields-to-maturity. This is true even though their coupon rates are different.
Introduction to Bond Discounts and Premiums Basics of Bond Pricing Bond Discounts and Premiums Factors Affecting Bond Prices Zeros: The Ultimate Discount Bonds Special Tax Consequences of Discount and Premium Bonds Summary of Bond Discounts and Premiums Find out what you learned