Which of the following statements is (are)true?
(I.The date on which a callable bond is redeemed/called is determined by the buyer of the bond.
(II.If the yield rate on a bond,i,is equal to the bond rate,r,then the price of the bond,P is always equal to the redemption value,C
(III)The full price and quoted price of a bond are exactly equal only on a coupon date
A)I,II,III
B)I,III only
C)II,III only
D)Correct answer is not given in A,B or C

Question

Quizplus · Accepted Answer

- Statement I is false because the date on which a callable bond is redeemed or called is determined by the issuer of the bond, not the buyer.- Statement II is true because when the yield rate on a bond equals the bond rate, the price of the bond will indeed be equal to its redemption value. This is because the bond is yielding exactly what it promises in terms of interest payments, making its present value equal to its redemption value.- Statement III is true because the full price of a bond includes accrued interest, which changes daily, but the quoted price does not. On a coupon date, no accrued interest exists, making the full price and quoted price equal.

Which of the Following Statements Is (Are)true