Lecture 4- Ch 5 (bonds) In Class Problems

# Lecture 4- Ch 5 (bonds) In Class Problems - Lecture 4: In...

This preview shows pages 1–2. Sign up to view the full content.

Lecture 4: In Class Problems (Ch.5 Bonds) Conceptual Questions 1. The coupon rate of a bond equals: A) its yield to maturity. B) a percentage of its price. C) the maturity value. D) a percentage of the par value. 2. When an investor purchases a \$1,000 par value bond that was quoted at 97.50, the investor: A) receives 97.50% of the stated coupon payments. B) receives \$975 upon the maturity date of the bond. C) pays 97.50% of face value for the bond. D) pays \$1,025 for the bond. 3. What is the yield to maturity for a bond paying semi-annual interest totaling \$100 per year, that has six years until maturity and sells for \$1,000? A) 6.0% B) 8.5% C) 10.0% D) 12.5% 4. What happens to the coupon rate of a bond that pays \$80 once a year in annual interest, if market interest rates change from 9% to 10%? A) The coupon rate increases to 10%. B) The coupon rate remains at 9%. C) The coupon rate remains at 8%. D) The coupon rate decreases to 8%.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

## Lecture 4- Ch 5 (bonds) In Class Problems - Lecture 4: In...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online