You may leave detailed work if you want to show the work however it it not necessary.

I just need the CORRECT answer.

The questions are a mix of multiple choice and problems on bond calculation

1

. How much will the coupon payments be of a

2

0

-year $

5

00 bond with a

8

% coupon rate and quarterly payments?

0

HTMLCONTROL Forms.HTML:Hidden.1

1

6

9

2

7

02

3

30

HTMLCONTROL Forms.HTML:Hidden.1

MultipleChoice

HTMLCONTROL Forms.HTML:Hidden.1

1

2. An investor holds a Ford bond with a face value of $5000, a coupon rate of

4

%, and semiannual payments that matures on 01/

15

/

20

09. How much will the investor receive on 01/15/2009?

0

HTMLCONTROL Forms.HTML:Hidden.1

16

9270

23

31

HTMLCONTROL Forms.HTML:Hidden.1

MultipleChoice

HTMLCONTROL Forms.HTML:Hidden.1

2

3. A university issues a bond with a face value of $

10

,000 and a coupon rate of 5.65% that matures on 07/15/2015. The holder of such a bond receives coupon payments of $282.50. How frequently are coupon payments made in this case? (Monthly, quarterly, semiannually or annually?

0

HTMLCONTROL Forms.HTML:Hidden.1

1692702332

HTMLCONTROL Forms.HTML:Hidden.1

MultipleChoice

HTMLCONTROL Forms.HTML:Hidden.1

3

4. Which of the following is true about the face value of a bond? |

It is the notional amount we use to compute coupon payments. |

0

HTMLCONTROL Forms.HTML:Hidden.1

1692702333

HTMLCONTROL Forms.HTML:Hidden.1

MultipleChoice

HTMLCONTROL Forms.HTML:Hidden.1

4

5. What is the yield to maturity of a one-year, risk-free, zero-coupon bond with a $10,000 face value and a price of $9600 when released? (percentage) |

0

HTMLCONTROL Forms.HTML:Hidden.1

1692702334

HTMLCONTROL Forms.HTML:Hidden.1

MultipleChoice

HTMLCONTROL Forms.HTML:Hidden.1

5

6. Why is the yield to maturity of a zero-coupon, risk-free bond that matures at the end of a given period the risk-free interest rate for that period? |

Since such a bond provides a risk-free return over that period, the Law of One Price guarantees the risk-free interest rate be equal to this yield. |

0

HTMLCONTROL Forms.HTML:Hidden.1

1692702335

HTMLCONTROL Forms.HTML:Hidden.1

MultipleChoice

HTMLCONTROL Forms.HTML:Hidden.1

6

7. A risk-free, zero-coupon bond with a face value of $1,000 has 15 years to maturity. If the YTM is 5.8%, which of the following would be closest to the price this bond will trade at? |

0

HTMLCONTROL Forms.HTML:Hidden.1

1692702336

HTMLCONTROL Forms.HTML:Hidden.1

MultipleChoice

HTMLCONTROL Forms.HTML:Hidden.1

7

8. A risk-free, zero-coupon bond with a $5000 face value has ten years to maturity. The bond currently trades at $3650. What is the yield to maturity of this bond? (percentage) |

0

HTMLCONTROL Forms.HTML:Hidden.1

1692702337

HTMLCONTROL Forms.HTML:Hidden.1

MultipleChoice

HTMLCONTROL Forms.HTML:Hidden.1

8

9. Which of the following statements is FALSE? |

The amount of each coupon payment is determined by the coupon rate of the bond. |

0

HTMLCONTROL Forms.HTML:Hidden.1

1692702338

HTMLCONTROL Forms.HTML:Hidden.1

MultipleChoice

HTMLCONTROL Forms.HTML:Hidden.1

9

10. Which of the following statements is FALSE? |

The internal rate of return (IRR) of an investment in a zero-coupon bond is the rate of return that investors will earn on their money if they buy a default free bond at its current price and hold it to maturity. |

0

HTMLCONTROL Forms.HTML:Hidden.1

1692702339

HTMLCONTROL Forms.HTML:Hidden.1

MultipleChoice

HTMLCONTROL Forms.HTML:Hidden.1

10

11. Consider a zero-coupon bond with a $1000 face value and ten years left until maturity. If the YTM of this bond is 10.4%, then the price of this bond? 12. Consider a zero-coupon bond with a $1000 face value and ten years left until maturity. If the bond is currently trading for $459, then the yield to maturity on this bond is? 13 . What is the yield to maturity of a five-year, $5000 bond with a 4.5% coupon rate and semiannual coupons if this bond is currently trading for a price of $4876? 0 HTMLCONTROL Forms.HTML:Hidden.1 1692702342 HTMLCONTROL Forms.HTML:Hidden.1 MultipleChoice HTMLCONTROL Forms.HTML:Hidden.1 13 14 . What must be the price of a $10,000 bond with a 6.5% coupon rate, semiannual coupons, and two years to maturity if it has a yield to maturity of 8% APR? 0 HTMLCONTROL Forms.HTML:Hidden.1 1692702343 HTMLCONTROL Forms.HTML:Hidden.1 MultipleChoice HTMLCONTROL Forms.HTML:Hidden.1 14 15. A $1000 bond with a coupon rate of 5.4% paid semiannually has five years to maturity and a yield to maturity of 7.5%. If interest rates rise and the yield to maturity increases to 7.8%, what will happen to the price of the bond? fall by $9.82 0 HTMLCONTROL Forms.HTML:Hidden.1 1692702344 HTMLCONTROL Forms.HTML:Hidden.1 MultipleChoice HTMLCONTROL Forms.HTML:Hidden.1 15 16. What is the coupon rate of a two-year, $10,000 bond with semiannual coupons and a price of $9543.45, if it has a yield to maturity of 6.8%? 0 HTMLCONTROL Forms.HTML:Hidden.1 1692702345 HTMLCONTROL Forms.HTML:Hidden.1 MultipleChoice HTMLCONTROL Forms.HTML:Hidden.1 16 17 . Which of the following bonds will be most sensitive to a change in interest rates? a ten-year bond with a $2000 face value whose yield to maturity is 5.8% and coupon rate is 5.8% APR paid semiannually 0 HTMLCONTROL Forms.HTML:Hidden.1 1692702346 HTMLCONTROL Forms.HTML:Hidden.1 MultipleChoice HTMLCONTROL Forms.HTML:Hidden.1 17 18 . Which of the following bonds is trading at par? a bond with a $2000 face value trading at $ 19 87 0 HTMLCONTROL Forms.HTML:Hidden.1 1692702347 HTMLCONTROL Forms.HTML:Hidden.1 MultipleChoice HTMLCONTROL Forms.HTML:Hidden.1 18 19. Which of the following bonds is trading at a premium? a five-year bond with a $2000 face value whose yield to maturity is 7.0% and coupon rate is 7.2% APR paid semiannually 0 HTMLCONTROL Forms.HTML:Hidden.1 1692702348 HTMLCONTROL Forms.HTML:Hidden.1 MultipleChoice HTMLCONTROL Forms.HTML:Hidden.1 19 20. Which of the following statements are true? A fall in bond prices causes interest rates to fall. 0 HTMLCONTROL Forms.HTML:Hidden.1 1692702349 HTMLCONTROL Forms.HTML:Hidden.1 MultipleChoice HTMLCONTROL Forms.HTML:Hidden.1 20 21 . A bond has a $1000 face value, ten years to maturity, and 7% semiannual coupon payments. What would be the expected difference in this bond’s price immediately before and immediately after the next coupon payment? $18 0 HTMLCONTROL Forms.HTML:Hidden.1 1692702350 HTMLCONTROL Forms.HTML:Hidden.1 MultipleChoice HTMLCONTROL Forms.HTML:Hidden.1 21 22 . Which of the following bonds will be most sensitive to a change in interest rates? a ten-year bond with a $2000 face value whose yield to maturity is 5.8% and coupon rate is 5.8% APR paid semiannually 0 HTMLCONTROL Forms.HTML:Hidden.1 1692702351 HTMLCONTROL Forms.HTML:Hidden.1 MultipleChoice HTMLCONTROL Forms.HTML:Hidden.1 22 23. A company issues a ten-year bond at par with a coupon rate of 6% paid semi-annually. The YTM at the beginning of the third year of the bond (8 years left to maturity) is 7.8%. What is the new price of the bond?
0 HTMLCONTROL Forms.HTML:Hidden.1 1692702352 HTMLCONTROL Forms.HTML:Hidden.1 MultipleChoice HTMLCONTROL Forms.HTML:Hidden.1 23 24 . A company issues a ten-year bond at par with a coupon rate of 6% paid semi-annually. The YTM at the beginning of the third year of the bond (8 years left to maturity) is 7.8%. What was the percentage change in the price of the bond over the past two years? 11.81% 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: Rating AAA AA A BBB BB YTM 6.70% 6.80% 7.00% 7.40% 8.00% 0 HTMLCONTROL Forms.HTML:Hidden.1 1692702353 HTMLCONTROL Forms.HTML:Hidden.1 MultipleChoice HTMLCONTROL Forms.HTML:Hidden.1 24 25. Assuming that Luther’s bonds receive a AAA rating, the price of the bonds will be closest to: (Points : 1) $1021 0 HTMLCONTROL Forms.HTML:Hidden.1 1692702354 HTMLCONTROL Forms.HTML:Hidden.1 MultipleChoice HTMLCONTROL Forms.HTML:Hidden.1 25 26. Suppose that when these bonds were issued, Luther received a price of $972.42 for each bond. What is the likely rating that Luther’s bonds received? (Points : 1) AA |

Order your essay today and save **25%** with the discount code: GREEN