FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 9: Bond Prices and Yields

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 21

Multiple Choice

Review LaterAdd Note

Review Later

A ________ bond is a bond where the bondholder has the right to cash in the bond before maturity at a specific price after a specific date.

A) callable
B) coupon
C) puttable
D) Treasury

E) A) and D)
F) All of the above

Correct Answer

verified

Show Answer

Question 22

Multiple Choice

Review LaterAdd Note

Review Later

The invoice price of a bond is the ________.

A) stated or flat price in a quote sheet plus accrued interest
B) stated or flat price in a quote sheet minus accrued interest
C) bid price
D) average of the bid and ask price

E) A) and B)
F) A) and C)

Correct Answer

verified

Show Answer

Question 23

Multiple Choice

Review LaterAdd Note

A coupon bond which pays interest of 4% annually, has a par value of $1 000, matures in 5 years, and is selling today at $785. The actual yield to maturity on this bond is ________.

Which of the following bonds would most likely sell at the lowest yield?

Consider the following $1 000 par value zero-coupon bonds: The expected one-year interest rate four years from now should be ________.

Assuming semiannual compounding, a 20-year zero coupon bond with a par value of $1 000 and a required return of 12% would be priced at ________.

The bonds of Elbow Grease Dishwashing Company have received a rating of 'C' by Moody's. The 'C' rating indicates the bonds are ________.

Consider a newly issued TIPS bond with a three year maturity, par value of $1000, and a coupon rate of 5%. Assume annual coupon payments. What is the nominal rate of return on the TIPS bond in the first year?

Which one of the following statements is correct?

A zero-coupon bond has a yield to maturity of 5% and a par value of $1 000. If the bond matures in 16 years, it should sell for a price of ________ today.

A bond has a 5% coupon rate. The coupon is paid semi-annually and the last coupon was paid 35 days ago. If the bond has a par value of $1 000, what is the accrued interest?

An investor pays $989.40 for a bond. The bond has an annual coupon rate of 4.8%. What is the current yield on this bond?

TIPS are an example of ________.

A 1% decline in yield will have the least effect on the price of the bond with a ________.

Everything else equal, ________ bonds will require a higher promised YTM than ________ bonds.

A coupon bond which pays interest of $60 annually, has a par value of $1 000, matures in 5 years, and is selling today at a $75.25 discount from par value. The current yield on this bond is ________.

Consider two bonds, A and B. Both bonds presently are selling at their par value of $1 000. Each pay interest of $120 annually. Bond A will mature in 5 years while Bond B will mature in 6 years. If the yields to maturity on the two bonds change from 12% to 14%, ________.

A ________ bond is a bond where the issuer has an option to retire the bond before maturity at a specific price after a specific date.

You purchased a 5-year annual interest coupon bond one year ago. Its coupon interest rate was 6% and its par value was $1 000. At the time you purchased the bond, the yield to maturity was 4%. If you sold the bond after receiving the first interest payment and the bond's yield to maturity had changed to 3%, your annual total rate of return on holding the bond for that year would have been approximately ________.

Yields on tax-exempt bonds are typically ________ yields on corporate bonds of similar risk and time to maturity.