chapter 6-test 2
Consider a zero-coupon bond with a $1000 face value and 10 years left until maturity. If the YTM of this bond is 10.2%, then the price of this bond is closest to ________.
$379
An investor holds a Ford bond with a face value of $5000, a coupon rate of 8.5%, and semiannual payments that matures on January 15, 2029. How much will the investor receive on January 15, 2029?
$5212.50
The Sisyphean Company has a bond outstanding with a face value of $1000 that reaches maturity in 5 years. The bond certificate indicates that the stated coupon rate for this bond is 8.1% and that the coupon payments are to be made semiannually.Assuming the appropriate YTM on the Sisyphean bond is 10.6%, then this bond will trade at ________.
B) As the coupon rate of 8.1% is less than the YTM of 10.6% on the bonds, so theywill trade at a discount.
A firm issues 5-year bonds with a coupon rate of 4.7%, paid semiannually. The credit spread for this firm's 5-year debt is 1.2%. New 5-year Treasury notes are being issued at par with a coupon rate of 5.1%. What should the price of the firm's outstanding 5-year bonds be if their face value is $1,000? $932.28 $12.00 $1305.19 $745.82
$932.28
A risk-free, zero-coupon bond with a $5000 face value has 15 years to maturity. The bond currently trades at $3750. What is the yield to maturity of this bond?
1.9364
Which of the following is true about the face value of a bond? It is the notional amount we use to compute coupon payments. It is the amount that is repaid at maturity. It is usually denominated in standard increments, such as $1,000. All of these are true.
All of these are true.
What is the coupon payment of a 15-year $10,000 bond with a 9% coupon rate with semiannual payments?
Coupon payment is the periodic coupon payment amount. Here we have: Fv=10,000 Coupon rate = 9% Coupon payments in a year = 2 Semiannual coupon payment amount = FV x coupon rate / Coupon payments in a year = $10,000 x 9%/2 = $450
What is the coupon payment of a 25-year $1000 bond with a 4.5% coupon rate with quarterly payments?
Solution Of question 1 Coupon Value Par Value = $1,000 Coupon rate = 4.5% Tenure = 25 year Coupon payment is quarterly, So number of quarter in year = 4 A Corporation issued bond some time back at par value at $1,000 coupon rate is 4.5%. So Quarter coupon payment = $1000×4.5%/4 = $11.25 Hence Quarter coupon payment is $11.25 per Quarter.
A bond has five years to maturity, a $1000 face value, and a 5.5% coupon rate with annual coupons. What is its yield to maturity if it is currently trading at $846.11?
d. 9.51%
A company issues a ten-year $1,000 face value bond at par with a coupon rate of 6.7% paid semiannually. The YTM at the beginning of the third year of the bond (8 years left to maturity) is 8.1%. What was the percentage change in the price of the bond over the past two years?
Face Value = $1,000Annual Coupon Rate = 6.7%Semi-annual Coupon Rate = 3.35%Semi-annual Coupon = 3.35%*$1,000 = $33.50 After 2 years: Annual YTM = 8.1%Semi-annual YTM = 4.05% Price of Bond = $33.50*PVIFA(4.05%, 16) + $1,000*PVIF(4.05%, 16)Price of Bond = $33.50*(1-(1/1.0405)^16)/0.0405 + $1,000/1.0405^16Price of Bond = $918.73 Change in Price = ($918.73 - $1,000) / $1,000Change in Price = -8.13%
A university issues a bond with a face value of $5000 and a coupon rate of 4.41% that matures on July 15, 2018. The holder of such a bond receives coupon payments of $110.25. How frequently are coupon payments made in this case?
semiannually
Security:TreasuryAAA CorporateBBB CorporateB CorporateYield (%):5.25.46.66.9 The above table shows the yields to maturity on a number of three-year, zero-coupon securities. What is the price per $100 of the face value of a three-year, zero-coupon corporate bond with a BBB rating?
$82.55
What must be the price of a $10,000 bond with a 6.1% coupon rate, semiannual coupons, and five years to maturity if it has a yield to maturity of 10% APR?
$8494.26
Consider a zero-coupon bond with a $1000 face value and 15 years left until maturity. If the bond is currently trading for $431, then the yield to maturity on this bond is closest to ________.
5.77%
Security:AAA CorporateAA CorporateA CorporateBBB CorporateBB CorporateYield (%):6.26.46.77.07.5 Consolidated Insurance wants to raise $35 million in order to build a new headquarters. The company will fund this by issuing 10-year bonds with a face value of $1,000 and a coupon rate of 6.3%, paid semiannually. The above table shows the yield to maturity for similar 10-year corporate bonds of different ratings. Which of the following is closest to how many more bonds Consolidated Insurance would have to sell to raise this money if their bonds received an A rating rather than an AA rating?
= 781 Bonds
A risk-free, zero-coupon bond has 15 years to maturity. Which of the following is closest to the price per $1000 of face value that the bond will trade at if the YTM is 6.1%?A) $663.78B) $774.42C) $553.15D) $885.05
Anonymous answered thisWas this answer helpful?902,094 answers Current price of the bond is given by the formula P = F / (1 + YTM)^N = 10,000 / 1.061^15= /1000= $553.15
The Sisyphean Company has a bond outstanding with a face value of $1000 that reaches maturity in 10 years. The bond certificate indicates that the stated coupon rate for this bond is 8.2% and that the coupon payments are to be made semiannually.Assuming the appropriate YTM on the Sisyphean bond is 7.3%, then the price that this bond trades for will be closest to
Answer: A 1063
A $1000 bond with a coupon rate of 6.2% paid semiannually has eight years to maturity and a yield to maturity of 8.3%. If interest rates rise and the yield to maturity increases to 8.6%, what will happen to the price of the bond?
Answer: B B) The price of the bond will fall by $15.78
If the yield to maturity of all of the following bonds is 6%, which will trade at the greatest premium per $100 face value? A) a bond with a $10,000 face value, four years to maturity and 6.2% semiannual coupon payments B) a bond with a $500 face value, seven years to maturity and 5.2% annual coupon payments C) a bond with a $5,000 face value, seven years to maturity and 5.5% annual couponpayments D) a bond with a $1,000 face value, five years to maturity and
Answer: D a bond with a $1,000 face value, five years to maturity and 6.3% annual coupon payments
Which of the following statements is true of bond prices? A fall in bond prices causes interest rates to fall. A fall in interest rates causes a fall in bond prices. A rise in interest rates causes bond prices to fall. Bond prices and interest rates are not connected.
C) A rise in interest rates causes bond prices to fall
A risk-free, zero-coupon bond with a face value of $10,000 has 15 years to maturity. If the YTM is 6.1%, which of the following would be closest to the price this bond will trade at?
Current price of the bond is given by the formula P = F / (1 + YTM)^N = 10,000 / 1.061^15 = $4,114.05
Security:AAA CorporateAA CorporateA CorporateBBB CorporateBB CorporateYield (%):5.7 // 5.8 // 6.0 // 6.6 // 6.9 Lloyd Industries raised $28 million in order to upgrade its roller kiln furnace for the production of ceramic tiles. The company funded this by issuing 15-year bonds with a face value of $1,000 and a coupon rate of 6.2%, paid annually. The above table shows the yield to maturity for similar 15-year corporate bonds of different ratings issued at the same time. When Lloyd Industries issued their bonds, they received a price of $962.63. Which of the following is most likely to be the rating these bonds received?
If the company's bonds are rated A, what will be their selling price? =6.5%*1000/6.1%*(1-1/1.061^30)+1000/1.061^30=$1,054.48
Which of the following bonds is trading at a premium? Group of answer choices a five-year bond with a $2,000 face value whose yield to maturity is 7.0% and coupon rate is 7.2% APR paid semiannuallya ten-year bond with a $4,000 face value whose yield to maturity is 6.0% and coupon rate is 5.9% APR paid semiannuallya 15-year bond with a $10,000 face value whose yield to maturity is 8.0% and coupon rate is 7.8% APR paid semiannuallya two-year bond with a $50,000 face value whose yield to maturity is 5.2% and coupon rate is 5.2% APR paid monthly
a five-year bond with a $2000 face value whose yield to maturity is 7.0% APR and coupon rate is
Security:TreasuryAAA CorporateBBB CorporateB CorporateYield (%):5.2 // 5.46. /// 87.2 The above table shows the yields to maturity on a number of two-year, zero-coupon securities. What is the credit spread on a two-year, zero-coupon corporate bond with a B rating?
credit spread = yield on 2 year zero coupon bond with B rating - yield on 2 year zero coupon Treasury securities credit spread = 7.2% - 5.2% = 2.0% Answer : D : 2.0% [Thumbs up please]
A bond is currently trading below par. Which of the following must be true about that bond? Group of answer choices: The bond's yield to maturity is less than its coupon rate. The bond is a zero-coupon bond. The bond's yield to maturity is greater than its coupon rate. The bond is a zero-coupon bond or The bond's yield to maturity is greater than its coupon rate
d. B or C above The bond is a zero-coupon bond or The bond's yield to maturity is greater than its coupon rate
