CH. 6 FIN 500

investment grade bond

A corporate bond which receives a BBB rating from Standard and Poor's is considered

peaked during WWII

According to Figure 6.5 in the text, the percent of countries in default or restructuring debt:

$118

Consider a zero-coupon bond with 20 years to maturity. The amount that the price of the bond will change if its yield to maturity decreases from 7% to 5% is closest to

$372

Consider a zero-coupon bond with a $1000 face value and 10 years left until maturity. If the YTM of this bond is 10.4%, then the price of this bond is closest to

8.1%

Consider a zero-coupon bond with a $1000 face value and 10 years left until maturity. If the bond is currently trading for $459, then the yield to maturity on this bond is closest to

?

Consider the following four corporate bonds that have semiannual compounding: SEE PIC If the YTM of these bonds decreases to 7%, which bond's price would be most sensitive to this change in YTM?

#4

Consider the following four corporate bonds that have semiannual compounding: SEE PIC If the YTM of these bonds increased to 9%, which bond's price would be most sensitive to this change in the YTM?

#2

Consider the following four corporate bonds that have semiannual compounding: SEE PIC Which of these bonds sells at a discount?

95.42

Consider the following yields to maturity on various one-year zero-coupon securities: SEE PIC The price (expressed as a percentage of the face value) of a one-year, zero-coupon corporate bond with a AAA rating is closest to:

94.70

Consider the following yields to maturity on various one-year zero-coupon securities: SEE PIC The price (expressed as a percentage of the face value) of a one-year, zero-coupon corporate bond with a BBB rating is closest to:

24,477

Luther Industries needs to raise $25 million to fund a new office complex. The company plans on issuing ten-year bonds with a face value of $1000 and a coupon rate of 7.0% (annual payments). The following table summarizes the YTM for similar ten-year corporate bonds of various credit ratings: Assuming that Luther's bonds receive a AAA rating, the number of bonds that Luther must issue to raise the needed $25 million is closest to:

$1021

Luther Industries needs to raise $25 million to fund a new office complex. The company plans on issuing ten-year bonds with a face value of $1000 and a coupon rate of 7.0% (annual payments). The following table summarizes the YTM for similar ten-year corporate bonds of various credit ratings: Assuming that Luther's bonds receive a AAA rating, the price of the bonds will be closest to:

8.2%

Suppose a five-year bond with a 7% coupon rate and semiannual compounding is trading for a price of $951.58. Expressed as an APR with semiannual compounding, this bond's yield to maturity (YTM) is closest to

8%

Suppose a ten-year bond with semiannual coupons has a price of $1,071.06 and a yield to maturity of 7%. This bond's coupon rate is closest to:

$40

The Sisyphean Company has a bond outstanding with a face value of $1000 that reaches maturity in 15 years. The bond certificate indicates that the stated coupon rate for this bond is 8% and that the coupon payments are to be made semiannually.How much will each semiannual coupon payment be?

1.0

The credit spread of the BBB corporate bond is closest to:

4.1%

The credit spread on B-rated corporate bonds is:

2.5%

The credit spread on BBB-rated corporate bonds is:

devaluation of the currency high inflation

The likely effect of a country printing additional currency to pay its debts is

$84.66

Use the following information to answer the question(s) below.Suppose the current zero-coupon yield curve for risk-free bonds is as follows: SEE PIC The price per $100 face value of a four-year, zero-coupon, risk-free bond is closest to:

$89.16

Use the following information to answer the question(s) below.Suppose the current zero-coupon yield curve for risk-free bonds is as follows: SEE PIC The price per $100 face value of a three-year, zero-coupon, risk-free bond is closest to:

$1045

Use the information for the question(s) below.The Sisyphean Company has a bond outstanding with a face value of $1000 that reaches maturity in 15 years. The bond certificate indicates that the stated coupon rate for this bond is 8% and that the coupon payments are to be made semiannually.Assuming the appropriate YTM on the Sisyphean bond is 7.5%, then the price at which this bond trades will be closest to

debt issued by national governments

sovereign debt is:

1.5%

the credit spread on AAA-rated corporate bonds is: