Question 1

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.

Answer

1 points

Question 2

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.

Answer

1 points

Question 3

1.

ABC has issued a bond with the following characteristics:

Par: $1,000; Time to maturity: 16 years; Coupon rate: 5%;

Assume annual coupon payments. Calculate the price of this bond if the YTM is 5.96%

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.

Answer

1 points

Question 4

1.

Stealers Wheel Software has 10.5% coupon bonds on the market with nine years to maturity. The bonds make semiannual payments and currently sell for 1,084% 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.

Answer

1 points

Question 5

1.

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

Answer

face value

coupon rate

discount amount

back-end amount

coupon

1 points

Question 6

1.

A premium bond is a bond that:

Answer

has a market price which exceeds the face value.

has a par value which exceeds the face value.

is selling for less than par value.

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

is callable within 12 months or less.

1 points

Question 7

1.

The 12.1 percent coupon bonds of the Peterson Co. are selling for 837.03 percent of par value. The bonds mature in

5 years and pay interest semi-annually. These bonds have current yield of _____ percent.

Answer

1 points

Question 8

1.

ABC has issued a bond with the following characteristics:

Par: $1,000; Time to maturity: 13 years; Coupon rate: 8%;

Assume semi-annual coupon payments. Calculate the price of this bond if the YTM is 10.99%

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.

Answer

1 points

Question 9

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.

Answer

1 points

Question 10

1.

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

Answer

nominal rate.

effective rate.

real rate.

current yield.

coupon rate.

1 points

Question 11

1.

Assume that you wish to purchase a 14-year bond that has a maturity value of $1,000 and a coupon interest rate of

5%, paid semiannually. If you require a 5.77% 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.

Answer

1 points

Question 12

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.

Answer

1 points

Question 13

1.

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

Answer

risk premium

yield to maturity

current yield

call yield

liquidity premium

1 points

Question 14

1.

A discount bond has a yield to maturity that:

Answer

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 15

1.

ABC has issued a bond with the following characteristics:

Par: $1,000; Time to maturity: 9 years; Coupon rate: 5%;

Assume semi-annual coupon payments. Calculate the price of this bond if the YTM is 7.15%

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.

Answer

1 points

Question 16

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.

Answer

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.

Answer

1 points

Question 18

1.

The 12.5 percent, $1,000 face value bonds of Tim McKnight, Inc., are currently selling at $1,037.95. 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.

Answer

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.

Answer

1 points

Question 20

1.

You paid $860 for a corporate bond that has a 5.97% 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.

Answer

1 points

Question 21

1.

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

Answer

premium bond.

perpetuity.

par value bond.

discount bond.

debenture.

1 points

Question 22

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?

Answer