 |
| 1 | |
A 20-year maturity bond with par value $1,000 makes semiannual payments at a coupon rate of 8%. The yield to maturity is 9%. How much should you pay for this bond? |
| | A) | $1,080 |
| | B) | $1,000 |
| | C) | $966 |
| | D) | $908 |
|
|
|
| 2 | |
A bond with a par value of $1,000 has a 6% annual coupon rate. Interest is paid semiannually and the price of the bond is $1,025. What is the current yield? |
| | A) | 3.0% |
| | B) | 2.9% |
| | C) | 6.0% |
| | D) | 5.9% |
|
|
|
| 3 | |
A semiannual coupon bond is currently selling for $1,142.12. The bond has a maturity of 10 years, a par value of $1,000 and a 9% coupon rate. What is the yield to maturity? |
| | A) | 3.5% |
| | B) | 7.0% |
| | C) | 7.5% |
| | D) | 9.0% |
|
|
|
| 4 | |
A Treasury bond with an 8% coupon paying interest semiannually is reported as selling at an ask price of 117:08. The last interest payment was made 3 months ago. What is the invoice price of the bond? |
| | A) | $1,170.80 |
| | B) | $1,170.08 |
| | C) | $1,172.50 |
| | D) | $1,192.50 |
|
|
|
| 5 | |
A 15-year maturity zero-coupon bond has a yield to maturity of 4% and a par value of $1,000. The price of the bond is ______________ and imputed interest in the first year is ______________. |
| | A) | $400.00; $16.00 |
| | B) | $400.00; $40.00 |
| | C) | $555.26; $40.00 |
| | D) | $555.26; $22.21 |
|
|
|
| 6 | |
One year ago, you purchased an annual coupon bond for $817.84. At that time the bond had a maturity of 15 years, a face value of $1,000, a coupon rate of 5%, and a yield to maturity of 7%. One year later, the yield to maturity increased to 7.5%. What is the total rate of return for the year? |
| | A) | 9.79% |
| | B) | 7.50% |
| | C) | 3.75% |
| | D) | 2.44% |
|
|
|
| 7 | |
You just purchased a 10-year maturity, semiannual coupon bond for $1,148.77. The bond has a face value of $1,000, a coupon rate of 8%, and a yield to maturity of 6%. The bond is callable in four years at $1,080. What is the yield to call? |
| | A) | 5.6% |
| | B) | 6.0% |
| | C) | 7.2% |
| | D) | 8.0% |
|
|
|
| 8 | |
Which of the following is not specified in a bond indenture? |
| | A) | Dividend restrictions |
| | B) | Collateral |
| | C) | Coupon rate |
| | D) | Default risk |
|
|
|
| 9 | |
A bond's invoice price is equal to ______________. |
| | A) | the present value of coupon interest payments plus the present value of par value |
| | B) | the present value of par value plus accrued interest |
| | C) | the flat price plus accrued coupon interest |
| | D) | the flat price plus the present value of remaining coupon interest payments |
|
|
|
| 10 | |
Treasury STRIPS ______________. |
| | A) | pay interest that is adjusted for inflation by resetting the coupon rate |
| | B) | pay interest that is adjusted for inflation by resetting the par value |
| | C) | are zero coupon Treasury securities created from Treasury notes and bonds |
| | D) | are Treasury bills issued in large denominations |
|
|
|
| 11 | |
A bond which gives the bondholder the option to exchange the bond for common stock prior to maturity is a ______________. |
| | A) | callable bond |
| | B) | floating-rate bond |
| | C) | puttable bond |
| | D) | convertible bond |
|
|
|
| 12 | |
Which of the following is not correct for a discount bond with a current yield of 8%? |
| | A) | The capital gains yield is positive over the life of the bond. |
| | B) | The coupon rate is less than 8%. |
| | C) | The yield to maturity is less than 8%. |
| | D) | The bond equivalent yield is greater than 8%. |
|
|
|
| 13 | |
In a period of particularly low interest rates, which of the following bonds is most likely to be called? |
| | A) | a coupon bond with a 1-year maturity, selling at a discount |
| | B) | a zero coupon bond |
| | C) | a coupon bond with a 25-year maturity, selling at a premium |
| | D) | a coupon bond with a 25 year maturity, selling at a discount |
|
|
|
| 14 | |
The yield to maturity is equal to the realized compound return if all coupon interest payments ______________. |
| | A) | are not reinvested |
| | B) | are reinvested at the market rate |
| | C) | are reinvested at the bond's coupon rate |
| | D) | are reinvested at the bond's yield to maturity |
|
|
|
| 15 | |
The yield curve indicates that one, two and three-year maturity, default-free, zero-coupon bonds have yields-to-maturity of 5%, 6% and 8%, respectively. What is the implied one-year forward rate one year from today? |
| | A) | 2.0% |
| | B) | 6.0% |
| | C) | 7.0% |
| | D) | 12.1% |
|
|
.