QUESTION 1

You paid \$832 for a corporate bond that has a 5.51% coupon rate. What is the current yield?

Hint: if nothing is mentioned, then assume par value = \$1,000

QUESTION 2

The yield to maturity on a Marshall Co. premium bond is 7.6 percent. This is the:

nominal rate.

effective rate.

real rate.

current yield.

coupon rate.

QUESTION 3

The rate required in the market on a bond is called the:

call yield

yield to maturity

current yield

QUESTION 4

A premium bond is a bond that:

is callable within 12 months or less.

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.

QUESTION 5

ABC has issued a bond with the following characteristics:

Par: \$1,000; Time to maturity: 16 years; Coupon rate: 4%;

Assume semi-annual coupon payments. Calculate the price of this bond if the YTM is 9.64%

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 6

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)?

QUESTION 7

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.

QUESTION 8

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?

QUESTION 9

Stealers Wheel Software has 5.25% coupon bonds on the market with nine years to maturity. The bonds make semi-annual payments and currently sell for 109.17% of par. What is the current yield?

QUESTION 10

ABC has issued a bond with the following characteristics:

Par: \$1,000; Time to maturity: 13 years; Coupon rate: 4%;

Assume annual coupon payments. Calculate the price of this bond if the YTM is 7.12%

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 11

The 5.2 percent, \$1,000 face value bonds of Tim McKnight, Inc., are currently selling at \$889.55. What is the current yield?

QUESTION 12

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.

QUESTION 13

ABC wants to issue 19-year, zero coupon bonds that yield 11.5 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.

QUESTION 14

The 12.4 percent coupon bonds of the Peterson Co. are selling for \$1,114.17. The bonds mature in 5 years and pay interest semi-annually. These bonds have current yield of _____ percent.