Question 1

If the price of a $10,000 par Treasury bond is $10,237.50 the quote would be listed in the newspaper as ________.

Accepted Answer

A)   102:10
B)   102:11
C)   102:12
D)   102:13E) B) and C)
F) None of the above

Question 2

A Japanese firm issued and sold a pound denominated bond in the United Kingdom.A U.S.firm issued bonds denominated in dollars but sold the bonds in Japan.Which one of the following statements is correct?

Accepted Answer

A)   Both bonds are examples of Eurobonds.
B)   The Japanese bond is a Eurobond and the U.S. bond is termed a foreign bond.
C)   The U.S. bond is a Eurobond and the Japanese bond is termed a foreign bond.
D)   Neither bond is a Eurobond.E) C) and D)
F) None of the above

Question 3

If the coupon rate on a bond is 4.50% and the bond is selling at a premium,which of the following is the most likely yield to maturity on the bond?

Accepted Answer

A)   4.30%
B)   4.50%
C)   5.20%
D)   5.50%E) A) and D)
F) C) and D)

Question 4

A bond pays a semi-annual coupon and the last coupon was paid 61 days ago.If the annual coupon payment is $75,what is the accrued interest?

Accepted Answer

A)   $13.21
B)   $12.57
C)   $15.44
D)   $16.32E) B) and D)
F) A) and B)

Question 5

A __________ bond is a bond where the issuer has an option to retire the bond before maturity at a specific price after a specific date.

Accepted Answer

A)   callable
B)   coupon
C)   puttable
D)   treasuryE) A) and B)
F) A) and C)

Question 6

You hold a subordinated debenture in a firm.In the event of bankruptcy you will be paid off before which one of the following?

Accepted Answer

A)   Mortgage bonds
B)   Senior debentures
C)   Preferred stock
D)   Equipment obligation bondsE) A) and C)
F) B) and D)

Question 7

Consider the following $1,000 par value zero-coupon bonds:  The expected one-year interest rate three years from now should be _________.

Accepted Answer

A)   7.00%
B)   8.00%
C)   9.00%
D)   10.00%E) B) and D)
F) B) and C)

Question 8

You buy a 10 year $1,000 par 4% annual payment coupon bond priced to yield 6%.You do not sell the bond at year end.If you are in a 15% tax bracket at year end you will owe taxes on this investment equal to _______.

Accepted Answer

A)   $9.10
B)   $4.25
C)   $7.68
D)   $5.20E) B) and C)
F) A) and C)

Question 9

A convertible bond has a par value of $1,000 but its current market price is $975.The current price of the issuing company's stock is $26 and the conversion ratio is 34 shares.The bond's market conversion value is _________.

Accepted Answer

A)   $1,000
B)   $884
C)   $933
D)   $980E) A) and D)
F) All of the above

Question 10

A mortgage bond is _______.

Accepted Answer

A)   secured by other securities held by the firm
B)   secured by equipment owned by the firm
C)   secured by property owned by the firm
D)   unsecuredE) B) and C)
F) A) and B)

Question 11

On May 1, 2007, Joe Hill is considering one of the following newly-issued 10 year AAA corporate bonds. 
-If the volatility of interest rates is expected to increase,the Joe Hill should __.

Accepted Answer

A)   prefer the Wildwood bond to the Asbury bond
B)   prefer the Asbury bond to the Wildwood bond
C)   be indifferent between the Wildwood bond and the Asbury bond
D)   there is not enough information given to tellE) A) and B)
F) A) and C)

Question 12

$1,000 par value zero coupon bonds, ignore liquidity premiums 
-One year from now Bond C should sell for ________ (to the nearest dollar) .

Accepted Answer

A)   $857
B)   $842
C)   $835
D)   $821E) B) and C)
F) A) and C)

Question 13

A coupon bond which pays interest semi-annually has a par value of $1,000,matures in 8 years,and has a yield to maturity of 6%.If the coupon rate is 7%,the intrinsic value of the bond today will be __________ (to the nearest dollar) .

Accepted Answer

A)   $1,000
B)   $1,063
C)   $1,081
D)   $1,100E) A) and C)
F) A) and B)

Exam 10: Bond Prices and Yields

$1,000 par value zero coupon bonds, ignore liquidity premiums -One year from now Bond C should sell for ________ (to the nearest dollar) .

Correct Answer
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Consider the following $1,000 par value zero-coupon bonds: The expected one-year interest rate three years from now should be _________.

Correct Answer
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You buy a 10 year $1,000 par 4% annual payment coupon bond priced to yield 6%.You do not sell the bond at year end.If you are in a 15% tax bracket at year end you will owe taxes on this investment equal to _______.

Correct Answer
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A coupon bond which pays interest semi-annually has a par value of $1,000,matures in 8 years,and has a yield to maturity of 6%.If the coupon rate is 7%,the intrinsic value of the bond today will be __________ (to the nearest dollar) .

Correct Answer
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A __________ bond is a bond where the issuer has an option to retire the bond before maturity at a specific price after a specific date.

Correct Answer
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If the price of a $10,000 par Treasury bond is $10,237.50 the quote would be listed in the newspaper as ________.

Correct Answer
verified

On May 1, 2007, Joe Hill is considering one of the following newly-issued 10 year AAA corporate bonds. -If the volatility of interest rates is expected to increase,the Joe Hill should __.

Correct Answer
verified

A Japanese firm issued and sold a pound denominated bond in the United Kingdom.A U.S.firm issued bonds denominated in dollars but sold the bonds in Japan.Which one of the following statements is correct?

Correct Answer
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You hold a subordinated debenture in a firm.In the event of bankruptcy you will be paid off before which one of the following?

Correct Answer
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A bond pays a semi-annual coupon and the last coupon was paid 61 days ago.If the annual coupon payment is $75,what is the accrued interest?

Correct Answer
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A mortgage bond is _______.

Correct Answer
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A convertible bond has a par value of $1,000 but its current market price is $975.The current price of the issuing company's stock is $26 and the conversion ratio is 34 shares.The bond's market conversion value is _________.

Correct Answer
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If the coupon rate on a bond is 4.50% and the bond is selling at a premium,which of the following is the most likely yield to maturity on the bond?

Correct Answer
verified

Exam 10: Bond Prices and Yields

$1,000 par value zero coupon bonds, ignore liquidity premiums -One year from now Bond C should sell for ________ (to the nearest dollar) .

Correct AnswerverifiedShow Answer

Consider the following $1,000 par value zero-coupon bonds: The expected one-year interest rate three years from now should be _________.

Correct AnswerverifiedShow Answer

You buy a 10 year $1,000 par 4% annual payment coupon bond priced to yield 6%.You do not sell the bond at year end.If you are in a 15% tax bracket at year end you will owe taxes on this investment equal to _______.

Correct AnswerverifiedShow Answer

A coupon bond which pays interest semi-annually has a par value of $1,000,matures in 8 years,and has a yield to maturity of 6%.If the coupon rate is 7%,the intrinsic value of the bond today will be __________ (to the nearest dollar) .

Correct AnswerverifiedShow Answer

A __________ bond is a bond where the issuer has an option to retire the bond before maturity at a specific price after a specific date.

Correct AnswerverifiedShow Answer

If the price of a $10,000 par Treasury bond is $10,237.50 the quote would be listed in the newspaper as ________.

Correct AnswerverifiedShow Answer

On May 1, 2007, Joe Hill is considering one of the following newly-issued 10 year AAA corporate bonds. -If the volatility of interest rates is expected to increase,the Joe Hill should __.

Correct AnswerverifiedShow Answer

A Japanese firm issued and sold a pound denominated bond in the United Kingdom.A U.S.firm issued bonds denominated in dollars but sold the bonds in Japan.Which one of the following statements is correct?

Correct AnswerverifiedShow Answer

You hold a subordinated debenture in a firm.In the event of bankruptcy you will be paid off before which one of the following?

Correct AnswerverifiedShow Answer

A bond pays a semi-annual coupon and the last coupon was paid 61 days ago.If the annual coupon payment is $75,what is the accrued interest?

Correct AnswerverifiedShow Answer

A mortgage bond is _______.

Correct AnswerverifiedShow Answer

A convertible bond has a par value of $1,000 but its current market price is $975.The current price of the issuing company's stock is $26 and the conversion ratio is 34 shares.The bond's market conversion value is _________.

Correct AnswerverifiedShow Answer

If the coupon rate on a bond is 4.50% and the bond is selling at a premium,which of the following is the most likely yield to maturity on the bond?

Correct AnswerverifiedShow Answer

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