Reference no: EM132756836

Questions -

Q1. A 30 year Treasury Bond is issues with par value of $1,000, paying interest of $80 per year. If market yields increase shortly after the T bond is issues, what happens to the bond's:

a. Coupon rate

b. Price

c. Yield to maturity

d. Current yield

Q2. A bond with a par value of $1,000 has a current yield of 7.5% and a coupon rate of 8%. What is the bond's price?

Q3. One bond has a coupon rate of 8%, another a coupon rate of 12%. Both bonds have 10 year maturities and sell at a yield to maturity at 10%. If the yield to maturity next year are still 10%, what is the rate of return on each bond? Does the higher coupon bond give a higher rate of return?

Q4. A 6 year Circular File Bond pays interest of $80 annually and sells for $950. What is the coupon rate, current yield, and yield to maturity?

Q5. A General Motors Bond carries a coupon rate of 8%, has 9 years until maturity, and sells at a yield to maturity of 9%.

a. What interest payments do bond holders receive each year?

b. At what price does the bond sell (Assume annual interest payments)?

c. What happens to the bond price if the yield to maturity falls to 7%?