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1 | |
If the yield to maturity is greater than the coupon rate, a bond will sell at a premium. |
| | A) | True |
| | B) | False |
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2 | |
Higher coupon bonds are more volatile than lower coupon bonds. |
| | A) | True |
| | B) | False |
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3 | |
The yield value of a 32nd » 32 × -Modified duration × Bond price × .01. |
| | A) | True |
| | B) | False |
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4 | |
A $1,000 par value bond is quoted at 101.3 and pays $55 in interest each year. The coupon rate is _____ percent and the current yield is _____ percent. |
| | A) | 5.25; 5.36 |
| | B) | 5.25; 5.50 |
| | C) | 5.50; 5.43 |
| | D) | 5.50; 5.61 |
| | E) | 5.50; 5.66 |
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5 | |
A semiannual coupon bond has a market price of $1,005.21 and a face value of $1,000. What is the coupon rate if the yield to maturity is 8.4 percent and the bond matures 7 years from now? |
| | A) | 8.40 percent |
| | B) | 8.50 percent |
| | C) | 8.55 percent |
| | D) | 8.60 percent |
| | E) | 8.65 percent |
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6 | |
Which one of the following statements is correct? |
| | A) | The YTM is less than the coupon rate for a discount bond. |
| | B) | A discount bond has a face value that is less than its market price. |
| | C) | A par value bond has a current yield that is greater than the coupon rate. |
| | D) | A premium bond sells for less than par. |
| | E) | The coupon rate is greater than the YTM for a premium bond. |
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7 | |
The price of a bond quote as seen in a newspaper is the ____ price and the price you pay to purchase a bond is the _____ price. |
| | A) | clean; clean |
| | B) | clean; dirty |
| | C) | dirty; clean |
| | D) | dirty; dirty |
| | E) | Answer depends on whether the bond pays interest annually or semiannually. |
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8 | |
Which one of these statements is true? |
| | A) | A 5-year bond is less sensitive to interest rate changes than a 1-year bond. |
| | B) | A 30-year bond is 50 percent more sensitive to interest rate changes than a 20-year bond. |
| | C) | A par value bond has no interest rate sensitivity. |
| | D) | A premium bond with 5 years to maturity will always sell for more than par value until the bond matures. |
| | E) | The realized return rarely equals the YTM, especially if the bond is considered long-term. |
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9 | |
The yield on a bond increases from 6.5 to 7.0 percent. What is the percentage change in the bond's price if the bond's modified duration is 5.9 years? |
| | A) | -3.59 percent |
| | B) | -3.14 percent |
| | C) | -2.95 percent |
| | D) | -2.28 percent |
| | E) | 1.09 percent |
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10 | |
Which one of the following has the longest duration? |
| | A) | 5-year, 10 percent coupon bond |
| | B) | 5-year, 15 percent coupon bond |
| | C) | 10-year, zero coupon bond |
| | D) | 10-year, 10 percent coupon bond |
| | E) | 10-year, 15 percent coupon bond |
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