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1-BCD’s $1,000 par value bonds...

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.

2 A discount bond has a yield to maturity that: a) exceeds the coupon rate. b)equals zero. c)is equal to the current yield. d)is less than the coupon rate. e)equals the bond's coupon rate.

3 Stealers Wheel Software has 6.5% coupon bonds on the market with nine years to maturity. The bonds make semi-annual payments and currently sell for 956.31% 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.

4 The 10.1 percent, $1,000 face value bonds of Tim McKnight, Inc., are currently selling at $990.77. 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.

5 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?

6 ABC has issued a bond with the following characteristics: Par: $1,000; Time to maturity: 8 years; Coupon rate: 4%; Assume semi-annual coupon payments. Calculate the price of this bond if the YTM is 6.92% 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. 7 ABC has issued a bond with the following characteristics: Par: $1,000; Time to maturity: 8 years; Coupon rate: 4%; Assume semi-annual coupon payments. Calculate the price of this bond if the YTM is 10.98% 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.

8 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.

9 The yield to maturity on a Marshall Co. premium bond is 7.6 percent. This is the: Answer a)nominal rate. b)effective rate. c)real rate. d)current yield. d)coupon rate.

10 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.

11 The 14 percent coupon bonds of the Peterson Co. are selling for 916.36 percent of par value. The bonds mature in 5 years and pay interest semi-annually. These bonds have current yield of _____ percent.

12 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.

13 The principal amount of a bond that is repaid at the end of term is called the par value or the: Answer a)back-end amount b)coupon rate c)coupon d)face value e)discount amount

14 The rate required in the market on a bond is called the: Answer a)liquidity premium b)current yield c)risk premium d)call yield e)yield to maturity

15 A bond which sells for less than the face value is called a: Answer a)discount bond. b)premium bond. c)par value bond. d)debenture. e)perpetuity.

16 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.

17 Assume that you wish to purchase a 12-year bond that has a maturity value of $1,000 and a coupon interest rate of 11%, paid semiannually. If you require a 7.6% 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.

18 You paid $968 for a corporate bond that has a 7.43% 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.

19 ABC has issued a bond with the following characteristics:

Par: $1,000; Time to maturity: 14 years; Coupon rate: 10%;

Assume annual coupon payments. Calculate the price of this bond if the YTM is 10.55%

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.

Question 20

A premium bond is a bond that:

a)has a par value which exceeds the face value.

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

c)is callable within 12 months or less.

d)is selling for less than par value.

e)has a market price which exceeds the face value.

21 ABC wants to issue 8-year, zero coupon bonds that yield 11.64 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.

22 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.

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