Bonds is the most interest rate sensitive

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Reference no: EM131853697

1. Which one of the following bonds is the most interest rate sensitive?

10-year, 5% coupon rate bond

10-year, 2% coupon rate bond

5-year, 5% coupon rate bond

5-year, 2% coupon rate bond

2. The high-yield bond is more likely to have a higher default risk.

True

False

3. The current yield on a bond is equal to the annual interest divided by which one of the following?

Issue price

Face amount

Current market price

Current par value

4. If a bond’s current yield exceeds its coupon rate, the bond is selling at:

a discount.

par.

a premium.

5. A bond has a face value of $1,000, a market price of $1,112, and pays $81 in interest every year. What is the coupon rate?

4.05%

4.50%

8.10%

9.00%

Reference no: EM131853697

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