2 will fall by about 13 of face. The bonds price would need to rise to a level where that 20 annual payment brought the investor a yield.5 percent. A) liquidity risk B) call risk C) default risk D) interest rate risk C) default risk Under normal economic conditions, the major source of risk faced by investors who purchase investment grade bonds is A) purchasing power risk. Let's look at an example using some simple numbers. A bond that makes no coupon payments and is initially sold at a deep discount is called a _ bond. Treasury, state/local government entities, and corporations. D) if they do not mature for at least 5 years. Coupon bonds selling at a premium. This means that its actual price will fluctuate over the course of each business day throughout its 30-year lifespan. For example, a bond with a face amount of 20,000 maturing in 20 years with.5 yield may be purchased for roughly 6,757. 3-year; 6 percent coupon.
D) have the principal and interest guaranteed by a third party. In short, " coupon " tells you what the bond paid when it was issued. The annual coupon divided by the face value of a bond is called the:. The bond callable at 110, should have the higher yield to maturity. B) interest rate risk. These long -term maturity dates can allow an investor to plan for a long -range goal, such as paying for a childs college education. Keep in mind that the coupon is always 2 percentthat doesnt change. .