FIN 4113 Chapter 3 Quiz

If a $5,000 coupon bond has a coupon rate of 13 percent, then the coupon payment every year is?

.13 x $5,000 = $650

Which of the following are true for a coupon bond?

1. The price of a coupon bond and the yield to maturity are inversely related 2. YTM is greater than the coupon rate when the bond price price is less than the par vale 3. When coupon bond is priced at its face value, the YTM is equal to coupon rate

Which of the following $1,000 face value securities has the highest yield to maturity? A) 5% coupon bond selling for $1,000 B) 10% coupon bond selling for $1,000 C) 15% coupon bond selling for $1,000 D) 15% coupon bond selling for $900

A 15% coupon bond selling for $900 selling at lowest price, and giving highest interest on every installment. Face value is same for all.

In which of the following situations would you prefer to be making a loan?

Interest rate is 4% and the expected inflation is 1%

The interest rate that equates the present value of the cash flow received from a debt instrument with its market price today is the

Yield to Maturity