Fixed_Income Chapter 1 - Chapter 1 Features of Fixed Income...

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1) A bond as a par value of $5,000 and a coupon rate of 8.5% payable semiannually. What is the dollar amount of the semiannual coupon payment? a. $212.50 b. $238.33 c. $425.00 d. $476.66 2) From the perspective of a bond holder, which of the following pairs of options would both add value to a straight (option free) bond? a. Call option, conversion option b. Accelerated sinking fund provision, put option c. Put option, conversion option d. Pre-payment option, exchange option 3) A 10-year bond pays no interest for 3 years, then pays $229.25, followed by payments of $35 semiannually for 7 years and an additional $1,000 at maturity. This bond is a(n): a. Accrual bond b. Zero-coupon bond c. Deferred coupon bond d. Step-up bond 4) Consider a $1 million semiannual-pay floating rate issue where the rate is reset on January 1 and July 1 each year. The reference rate if 6-month LIBOR and the stated margin is 1.25%. If 6-month LIBOR is 6.5% on July 1, what will the next semiannual coupon be on this issue? a.
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This note was uploaded on 11/06/2010 for the course ECON Econ taught by Professor Liasa during the Spring '10 term at University of San Francisco.

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Fixed_Income Chapter 1 - Chapter 1 Features of Fixed Income...

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