Please help with 22 questions

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Question 1

1.       A discount bond has a yield to maturity that:

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exceeds the coupon rate.

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equals zero.

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is equal to the current yield.

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is less than the coupon rate.

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equals the bond's coupon rate.

1 points

Question 2

1.       The rate required in the market on a bond is called the:

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call yield

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current yield

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yield to maturity

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risk premium

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liquidity premium

1 points

Question 3

1.       ABC has issued a bond with the following characteristics:

Par: $1,000; Time to maturity: 17 years; Coupon rate: 4%;

Assume semi-annual coupon payments. Calculate the price of this bond if the YTM is 8.33%

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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1 points

Question 4

1.       A bond which sells for less than the face value is called a:

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perpetuity.

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par value bond.

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debenture.

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premium bond.

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discount bond.

1 points

Question 5

1.       You paid $908 for a corporate bond that has a 11.77% coupon rate. What is the current yield?

Hint: if nothing is mentioned, then assume par value = $1,000

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

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1 points

Question 6

1.       Assume that you wish to purchase a 13-year bond that has a maturity value of $1,000 and a coupon interest rate of 4%, paid semiannually. If you require a 8.91% rate of return on this investment (YTM), what is the maximum price that you should be willing to pay for this bond? That is, solve for PV.

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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1 points

Question 7

1.       ABC wants to issue 8-year, zero coupon bonds that yield 6.65 percent. What price should they charge for these bonds if they have a par value of $1,000? That is, solve for PV. Assume annual compounding.

Hint: zero coupon bonds means PMT = 0

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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1 points

Question 8

1.       ABC has issued a bond with the following characteristics:

Par: $1,000; Time to maturity: 15 years; Coupon rate: 4%;

Assume annual coupon payments. Calculate the price of this bond if the YTM is 9.5%

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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1 points

Question 9

1.       ABC's bonds have a 9.5 percent coupon and pay interest semi-annually. Currently, the bonds are quoted at 106.315 percent of par value. The bonds mature in 8 years. What is the yield to maturity?

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1 points

Question 10

1.       The 8 percent coupon bonds of the Peterson Co. are selling for 98 percent of par value. The bonds mature in 5 years and pay interest semi-annually. These bonds have a yield to maturity of _____ percent.

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1 points

Question 11

1.       ABC's Inc.'s bonds currently sell for $1,280 and have a par value of $1,000. They pay a $135 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,050. What is their yield to call (YTC)?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

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1 points

Question 12

1.       The 10.57 percent coupon bonds of the Peterson Co. are selling for $884.85. The bonds mature in 5 years and pay interest semi-annually. These bonds have current yield of _____ percent.

Enter your answer in percentages rounded off to two decimal points.

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1 points

Question 13

1.       The 11.34 percent, $1,000 face value bonds of Tim McKnight, Inc., are currently selling at $986.98. What is the current yield?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

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1 points

Question 14

1.       A premium bond is a bond that:

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is callable within 12 months or less.

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has a market price which exceeds the face value.

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is selling for less than par value.

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has a face value in excess of $1,000.

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has a par value which exceeds the face value.

1 points

Question 15

1.       ABC Inc., has $1,000 face value bonds outstanding. These bonds mature in 3 years, and have a 6.5 percent coupon. The current price is quoted at 98.59 percent of par value. Assume semi-annual payments. What is the yield to maturity?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

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1 points

Question 16

1.       A firm's bonds have maturity of 10 years with a $1000 face value, an 8% semi-annual coupon, are callable in 5 years, at $1,050, and currently sells at a price of $1,100. What is the yield to call (YTC)?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

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1 points

Question 17

1.       The principal amount of a bond that is repaid at the end of term is called the par value or the:

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back-end amount

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coupon

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face value

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discount amount

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coupon rate

1 points

Question 18

1.       Stealers Wheel Software has 5.94% coupon bonds on the market with nine years to maturity. The bonds make semi-annual payments and currently sell for 90% of par. What is the current yield?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

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1 points

Question 19

1.       BCD’s $1,000 par value bonds currently sell for $798.40. The coupon rate is 10%, paid semi-annually. If the bonds have 5 years to maturity, what is the yield to maturity?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

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1 points

Question 20

1.       The yield to maturity on a Marshall Co. premium bond is 7.6 percent. This is the:

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nominal rate.

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effective rate.

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real rate.

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current yield.

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coupon rate.

1 points

Question 21

1.       ABC has issued a bond with the following characteristics:

Par: $1,000; Time to maturity: 19 years; Coupon rate: 5%;

Assume semi-annual coupon payments. Calculate the price of this bond if the YTM is 5.16%

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

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1 points

Question 22

1.       ABC Corp. issued 15-year bonds 2 years ago at a coupon rate of 10.6%. The bonds make semi-annual payments. If these bonds currently sell for 97% of par value, what is the YTM?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

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1 points

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