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A coupon bond that pays interest semi-annually has a par

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Reference no: EM13482944

1. A coupon bond that pays interest semi-annually has a par value of $1,000, matures in 7 years, and has a yield to maturity of 11%. The intrinsic value of the bond today will be __________ if the coupon rate is 8.8%.

$922.78
$894.51
$1,075.80
$1,077.20
None of these is correct.

2. A coupon bond that pays interest of $40 semi annually has a par value of $1,000, matures in 4 years, and is selling today at a $36 discount from par value. The yield to maturity on this bond is __________.

8.69%
9.09%
10.43%
9.76%
None of these is correct.

3. A coupon bond that pays interest of $100 annually has a par value of $1,000, matures in 5 years, and is selling today at a $72 discount from par value. The yield to maturity on this bond is __________.

6.00%
8.33%
12.00%
60.00%
None of these is correct.

4. The ______ is a measure of the average rate of return an investor will earn if the investor buys the bond now and holds until maturity.

current yield
dividend yield
P/E ratio
yield to maturity
discount yield

5. A coupon bond that pays interest annually is selling at par value of $1,000, matures in 5 years, and has a coupon rate of 9%. The yield to maturity on this bond is:

8.0%
8.3%
9.0%
10.0%
None of these is correct.

6. If the value of a Treasury bond was higher than the value of the sum of its parts (STRIPPED cash flows) you could

profit by buying the stripped cash flows and reconstituting the bond.
not profit by buying the stripped cash flows and reconstituting the bond.
profit by buying the bond and creating STRIPS.
not profit by buying the stripped cash flows and reconstituting the bond but profit by buying the bond and creating STRIPS
None of these is correct.

7. The yield curve

is a graphical depiction of term structure of interest rates.
is usually depicted for U. S. Treasuries in order to hold risk constant across maturities and yields.
is usually depicted for corporate bonds of different ratings.
is a graphical depiction of term structure of interest rates and is usually depicted for U. S. Treasuries in order to hold risk constant across maturities and yields.
is a graphical depiction of term structure of interest rates and is usually depicted for corporate bonds of different ratings.

8.

Year Forward rate:

1 4.6%
2 4.9
3 5.3
4 5.5
5 5.8

What is the yield to maturity of a 2-year bond?4.6%
4.9%
5.2%
4.7%
5.8%

Reference no: EM13482944

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