Question 1

1. You paid $1,183 for a corporate bond that has a 5.38% 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.

1 points

Question 2

1. The 13.97 percent coupon bonds of the Peterson Co. are selling for $1,117.84. 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.

1 points

Question 3

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

debenture.

discount bond.

premium bond.

par value bond.

perpetuity.

1 points

Question 4

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

discount amount

coupon rate

back-end amount

coupon

face value

1 points

Question 5

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.

1 points

Question 6

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.

1 points

Question 7

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.

1 points

Question 8

1. Assume that you wish to purchase a 8-year bond that has a maturity value of $1,000 and a coupon interest rate of 10%, paid semiannually. If you require a 7.52% 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.

1 points

Question 9

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

yield to maturity

call yield

risk premium

liquidity premium

current yield

1 points

Question 10

1. ABC wants to issue 11-year, zero coupon bonds that yield 11.96 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.

1 points

Question 11

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

exceeds the coupon rate.

equals zero.

is equal to the current yield.

is less than the coupon rate.

equals the bond’s coupon rate.

1 points

Question 12

1. A premium bond is a bond that:

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

is selling for less than par value.

has a par value which exceeds the face value.

is callable within 12 months or less.

has a market price which exceeds the face value.

1 points

Question 13

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

nominal rate.

effective rate.

real rate.

current yield.

coupon rate.

1 points

Question 14

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

Par: $1,000; Time to maturity: 14 years; Coupon rate: 10%;

Assume annual coupon payments. Calculate the price of this bond if the YTM is 10.55%

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.

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.

1 points

Question 16

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

Par: $1,000; Time to maturity: 11 years; Coupon rate: 11%;

Assume semi-annual coupon payments. Calculate the price of this bond if the YTM is 6.28%

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.

1 points

Question 17

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.

1 points

Question 18

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.

1 points

Question 19

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

Par: $1,000; Time to maturity: 9 years; Coupon rate: 11%;

Assume semi-annual coupon payments. Calculate the price of this bond if the YTM is 4.71%

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.

1 points

Question 20

1. The 12.92 percent, $1,000 face value bonds of Tim McKnight, Inc., are currently selling at $1,069.77. 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.

1 points

Question 21

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?

1 points

Question 22

1. Stealers Wheel Software has 5.97% coupon bonds on the market with nine years to maturity. The bonds make semi-annual payments and currently sell for 95.23% 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.