FIN_301_Porter__Chapter_7-1

FIN_301_Porter__Chapter_7-1 - What is the price of the...

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Chapter 7 Practice Quiz 1 1. Thatcher Corporation’s bonds will mature in 10 years. The bonds have a face value of $1,000 and an 8 percent coupon rate, paid semiannually. The price of the bonds is $1,100. The bonds are callable in 5 years at a call price of $1,050. What is the yield to maturity? A. 3.31% B. 4.42% C. 6.62% D. 8.00% 2. Using the information from the above problem, what is the yield to call? A. 3.31% B. 3.24% C. 8.00% D. 6.49% 3. Nungresser Corporation has issued bonds that have a 9 percent coupon rate, payable semiannually. The bonds mature in 8 years, have a face value of $1,000, and a yield to maturity of 8.5 percent.
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Unformatted text preview: What is the price of the bonds? A. $1,012.46 B. $1,028.60 C. $1,010.65 D. $1,058.32 4. You just purchased a bonds that matures in 5 years. The bond has a face value of $1,000, an 8 percent annual coupon, and has a current yield of 8.21 percent. What is the bonds yield to maturity? A. 8.17% B. 8.21% C. 8.65% D. 8.78% 5. A 10-year, 12 percent semiannual coupon bond, with a par value of $1,000, may be called in 4 years at a call price of $1,060. The bond sells for $1,100. What is the bonds capital gain or loss yield? A. 0.91% gain B. 0.91% loss C. 0.54% gain D. 0.54% loss...
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