Chapter 6 Questions
8.34%
A bond has a par value of $1,000, a current yield of 8.09 percent, and semiannual coupon payments. The bond is quoted at 103.12. What is the coupon rate of the bond? Multiple Choice 16.18% 16.68% 9.39% 8.34% 8.09%
$1,114.23
A bond that pays interest semiannually has a coupon rate of 5.56 percent and a current yield of 4.99 percent. The par value is $1,000. What is the bond's price? Multiple Choice $1,114.23 $1,057.11 $897.48 $1,207.08 $1,095.66
Face value
What is the principal amount of a bond that is repaid at the end of the loan term called? Coupon Market price Accrued price Dirty price Face value
is selling at a premium.
When a bond's yield to maturity is less than the bond's coupon rate, the bond: had to be recently issued. is selling at a premium. has reached its maturity date. is priced at par. is selling at a discount.
A discount bond has a coupon rate that is less than the bond's yield to maturity.
Which one of the following statements is true? Multiple Choice The current yield on a par value bond will exceed the bond's yield to maturity. The yield to maturity on a premium bond exceeds the bond's coupon rate. The current yield on a premium bond is equal to the bond's coupon rate. A premium bond has a current yield that exceeds the bond's coupon rate. A discount bond has a coupon rate that is less than the bond's yield to maturity.
$1,014.40
Wine and Roses, Incorporated, offers a bond with a coupon of 8.5 percent with semiannual payments and a yield to maturity of 8.34 percent. The bonds mature in 17 years. What is the market price of a $1,000 face value bond? multiple choice $1,269.90 $1,014.40 $1,779.49 $1,249.32 $1,765.09
coupon rate.
A bond's annual interest divided by its face value is referred to as the: market rate. call rate. coupon rate. current yield. yield to maturity.
6.02%
Broke Benjamin Company has a bond outstanding that makes semiannual payments with a coupon rate of 6.3 percent. The bond sells for $1,031.92 and matures in 19 years. The par value is $1,000. What is the YTM of the bond? Multiple Choice 5.41% 4.51% 6.02% 3.01% 5.72%
semiannual
Generally speaking, bonds issued in the U.S. pay interest on a(n) __________blank basis. annual semiannual quarterly monthly daily
$290.23
Navarro, Incorporated, plans to issue new zero coupon bonds with a par value of $1,000 to fund a new project. The bonds will have a YTM of 5.01 percent and mature in 25 years. If we assume semiannual compounding, at what price will the bonds sell? Multiple Choice $290.23 $280.56 $282.98 $278.62 $294.60
Liquidity premium
Suppose that a small, rural city in the countryside of North Dakota plans to issue $150,000 worth of 10-year bonds. Which one of the following components of the bond's yield will be affected by the fact that no active secondary market is expected for these bonds? Real rate Liquidity premium Interest rate risk premium Inflation premium Taxability premium
current market price.
The current yield on a bond is equal to the annual interest divided by the: issue price. maturity value. face amount. current market price. current par value.
indenture.
The written agreement that contains the specific details related to a bond issue is called the bond: indenture. debenture. document. registration statement. issue paper.