FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 6: Interest Rates and Bond Valuation

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 51

Multiple Choice

Review LaterAdd Note

Review Later

A 15-year, annual coupon bond is priced at $984.56.The bond has a $1,000 face value and a yield to maturity of 6.5 percent.What is the coupon rate?

A) 3.17 percent
B) 2.50 percent
C) 6.74 percent
D) 6.38 percent
E) 6.34 percent

F) A) and B)
G) B) and E)

Correct Answer

verified

Show Answer

Question 52

Multiple Choice

Review LaterAdd Note

Review Later

A U.S.Treasury bond pays 2.80 percent interest.You are in the 27 percent marginal tax bracket.What is your after tax yield on this bond?

A) 2.89 percent
B) 2.14 percent
C) 2.04 percent
D) 1.97 percent
E) 2.22 percent

F) A) and D)
G) All of the above

Correct Answer

verified

Show Answer

Question 53

Multiple Choice

Review LaterAdd Note

Last year, Forest Products issued both 5-year and 10-year bonds at par.The bonds each have a coupon rate of 5.5 percent, paid semiannually, and a face value of $1,000.Assume the yield to maturity on each of these bonds is now 7.4 percent.What is the percentage change in the price of the 5-year bond since it was issued? The 10-year bond?

The price at which an investor can purchase in the bond market is called the _____ price.

If inflation is expected to steadily decrease in the future, the term structure of interest rates will most likely be:

GN Supply wants to issue new 10-year, $1,000 face value bonds at par.The company currently has 6.35 percent coupon bonds on the market that sell for $983.20, make semiannual interest payments, and mature in 10 years.What coupon rate should the company set on its new bonds?

Which statement is correct?

Jeffries, Inc., has semiannual, 6 percent coupon bonds on the market that currently have 11 years left to maturity.If the market rate of return for this bond is 7.13 percent three years from now, what will be the bond's clean price at that time?

What is the principal amount of a bond that is repaid at the end of the loan term called?

Smiley Industrial Goods has $1,000 face value bonds on the market with semiannual interest payments, 13.5 years to maturity, and a market price of $1,023.At this price, the bonds yield 6.4 percent.What must be the coupon rate on these bonds?

Which one of the following types of bonds should an investor purchase if he or she is primarily concerned about ensuring that bond ownership will increase his or her purchasing power?

The price at which a dealer will purchase a bond is referred to as the _____ price.

The purpose of a bond sinking fund is to:

Whitts BBQ would like to issue some 10-year, semiannual coupon bonds at par.Comparable bonds have a current yield of 9.16 percent, an effective annual yield of 9.68 percent, and a yield to maturity of 9.50 percent.What coupon rate should Whitts BBQ set on its bonds?

The relationship between nominal returns, real returns, and inflation is referred to as the:

Which one of the following is the quoted price of a bond?

A bond has a coupon rate of 5.65 percent, a face value of $1,000, semiannual payments, and sells at par.The current yield is _____ percent and the effective annual yield is _____ percent.

Which one of the following bonds is the most sensitive to changes in market interest rates?

A company originally issued bonds that were rated investment grade.These bonds have now been downgraded to junk status.These bonds are referred to as:

A bond yielded a real rate of return of 3.87 percent for a time period when the inflation rate was 3.75 percent.What was the actual nominal rate of return?