CH07AQZV7 - Chapter 07 Quiz A Student Name _ _ 1. Student...

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Chapter 07 Quiz A Student Name _________________________ Student ID ____________ ________ 1. A semi-annual 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. 5-year; 6 percent coupon b. 5-year; zero coupon c. 10-year; zero coupon d. 10-year; 6 percent coupon ________ 4. What is the tax-equivalent 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 semi-annual 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 semi-annually 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 semi-annual, five-year 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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Chapter 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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CH07AQZV7 - Chapter 07 Quiz A Student Name _ _ 1. Student...

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