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Bus173-Midterm#2Fall09 - L5[No 2PrNCrLoNrtl L TO USE...

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^ SCANTRON'" FOFIM NO. 882-F FOR USE ON TEST SCORING MACHINE ONLY ilt F tr c >ntr|nttrtrnilrn uJ lo ul ut uJ r.rJ ttJ uJ uJ uJ uJ u.t )<'lLJLr ?++?f++?3f T{l+0?e+#+e I . tr tr tr tr -lr , I r -l I i y l r p, f r T l rll y y q r ur rrr y,,r ulu u ur rl ; .lr ; ; ; . .. " :'l::*:'-::::l::::::=lltltsri+;yry A A A A A A A A N ?I+ A A A A A A A A AIS A A A A A A A A ,- . .;i"l=::=:=t::=lt??o:::::llit=::s?++3 :::: i;::::,': o ]::;:':l::::::::::lr::, j, ' , jJ : : : : : : : : ; :,' :' T : * + : i Tl+ P f ' + i : : : +il T T 3 r $ s + - i ***r++#*rrlri-: j::: j jli:: jl jliil*****i;;; x R R:: i lF I i i I I * I =l: $ s i i;;;;; L,JJJ,!_!_,1.LI I I I I lTt I I I r r i i i i i I esiii&i&**l* Ir nii;i;;i;,i t iSlAiII-"1 -.-qs P oFAtoN 2oo7 '" -LSLHVED rUS PAT NOS Osl! lrbS io8tr ,8/ , -9890 4-. -*:sgl*x3iL,_jY:,' - L5[No 2PrNCrLoNrtl L . MAKE DARK MARKS . ERASE COMPLETELY TO CHANGE TO USE SUBJECTIVE SCOBE FEATURE: . Mark total possible subiective points . Only one mark per line on key . 163 points maximum EXAITPLE oF s eo 30 'o do - sruDENr 'j ii 'j t -i f . SCORE:4J2jo- ln to l6 II I l" lo N n o a ! o o ! a a ti +r: F?I i+tT +#T E?T Ml2 0208 34
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I. Multiple Choice Questions ( 5 points each) 1 Which of the following statdments is false? a. If the bond trades at a discount, and investor rvho bul,s the bond u,illearn a returu both fi'om receiving the coupons and fron receiving a face value that is less than the price paid for the bond. b. The market, instead of the bond issuer, detennines the coupon rate. @Zero - coupon bonds alrn'ays trade for a discount. t. Changes in market interest rates don't affect the price of bond. 2. Which of the following statements is false? a. When a bond is trading at a premium, the price drop when a coupon is paid will be larger than the price increase between coupons, so the bond's premium will tend to decline as tirne passes. b. When a bond trades at a price equal to its face value, it is said to trade at par. OX interest rates and bond yield rise, bond prices will rise.
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