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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