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Chapter 07 Quiz A
Student Name _________________________
Student ID ____________
________
1.
A semiannual corporate bond has a face value of $1,000, a yield to maturity of 6.9 percent, and a coupon
rate of 6.5 percent. The bond matures 8 years from today. This bond:
a. pays interest payments of $34.50 every six months.
b. sells at a premium.
c. has a current yield that is greater than 6.5 percent.
d. is currently quoted at a price of 97:18.
________ 2.
The price you receive when you sell a Treasury bond is the _____ price.
a. bid
b. yield
c. call
d. asked
________ 3.
Which one of the following bonds has the most interest rate risk?
a. 5year; 6 percent coupon
b. 5year; zero coupon
c. 10year; zero coupon
d. 10year; 6 percent coupon
________ 4.
What is the taxequivalent yield of a 4.5 percent municipal bond if the bondholder is in the 27 percent federal
tax bracket? Ignore state and local taxes.
a. 3.29 percent
b. 5.72 percent
c. 6.16 percent
d. 16.67 percent
________ 5.
Jenny earned 6.7 percent on her investments last year. What was her real rate of return if the inflation rate
was 1.6 percent?
a. 5.02 percent
b. 5.10 percent
c. 8.30 percent
d. 10.74 percent
________ 6.
Kiddy and Kat, Inc. has 9 percent semiannual bonds outstanding with 13 years to maturity. The latest
quote on these bonds is 110.23. What is the yield to maturity?
a. 5.81 percent
b. 6.87 percent
c. 6.92 percent
d. 7.74 percent
________ 7.
Black and White, Inc. offers a 7.5 percent bond with a yield to maturity of 6.65 percent. The bond pays
interest annually and matures in 17 years. What is the market price of one of these bonds if the face value is
$1,000?
a. $1,046.02
b. $1,046.88
c. $1,085.04
d. $1,085.78
________ 8.
A zero coupon bond is currently priced to yield 5.87 percent if held to maturity 6.9 years from now. What is
the current price of this bond if the face value is $1,000?
a. $674.63
b. $675.13
c. $675.29
d. $676.01
________ 9.
The bonds of B&O, Inc. are currently quoted at 98.72 and have a 6.75 percent coupon. The bonds
pay interest semiannually and mature in 9 years. What is the current yield on these bonds?
a. 6.82 percent
b. 6.84 percent
c. 6.87 percent
d. 6.91 percent
________ 10. A semiannual, fiveyear bond is currently selling for $1,034.60 and has a yield to maturity of 5.94 percent.
What is the coupon rate of this bond if the face value is $1,000?
a. 6.50 percent
b. 6.60 percent
c. 6.75 percent
d. 7.0 percent
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View Full DocumentChapter 07 Quiz A
Answers
1.
c
2
8
2
8
2
069
.
1
000
,
1
$
2
069
.
2
069
.
1
/
1
1
2
000
,
1
$
065
.
P
×
×
+
+
+

×
×
=
; P = $394.54 + $581.18 = $975.72
Enter
8
×
2
6.9/2
65/2
1,000
N
I/Y
PV
PMT
FV
Solve for
975.72
Current yield = (.065
×
$1,000)
÷
$975.72 = .0666 = 6.66 percent
2.
a
You receive the bid price when you sell a Treasury bond.
3.
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 Spring '08
 staff
 Finance, Interest

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