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Unformatted text preview: ECON 320 Chapter 4 Review Sheets Professor C. James Hueng 1) A loan that requires the borrower to make the same payment every period until the maturity date is called a A) simple loan. B) fixed payment loan. C) discount loan. D) a same payment loan. E) none of the above. 2) A coupon bond pays the owner of the bond A) the same amount every month until maturity date. B) the face value of the bond plus an interest payment once the maturity date has been reached. C) a fixed interest payment every period and repays the face value at the maturity date. D) the face value at the maturity date. E) none of the above. 3) If a $5,000 coupon bond has a coupon rate of 13 percent, then the coupon payment every year is A) $650. B) $1,300. C) $130. D) $13. E) None of the above. 4) An $8,000 coupon bond with a $400 coupon payment every year has a coupon rate of A) 5 percent B) 8 percent C) 10 percent D) 40 percent 5) A $16,000 coupon bond with an $800 coupon payment every year has a coupon rate of A) 4 percent. B) 8 percent. C) 10 percent. D) 40 percent. E) None of the above. 6) A $10,000 coupon bond with an $800 coupon payment every year has a coupon rate of A) 4 percent. B) 8 percent. C) 10 percent. D) 40 percent. 7) With an interest rate of 5 percent, the present value of $100 next year is approximately A) $100. B) $105. C) $95. D) $90. 8) With an interest rate of 10 percent, the present value of a security that pays $1,100 next year and $1,464.10 four years from now is: A) $1,000. B) $2,560. C) $3,000. D) $2,000. 9) If a security pays $110 next year and $121 the year after that what is its yield to maturity if it sells for $200? A) 9 percent B) 10 percent C) 11 percent D) 12 percent 10) Which of the following $1,000 face value securities has the highest yield to maturity? A) A 5 percent coupon bond with a price of $600 B) A 5 percent coupon bond with a price of $800. C) A 5 percent coupon bond with a price of $1,000. D) A 5 percent coupon bond with a price of $1,200. E) A 5 percent coupon bond with a price of $1,500. 11) Which of the following $1,000 face value securities has the lowest yield to maturity? A) A 15 percent coupon bond with a price of $600. B) A 15 percent coupon bond with a price of $800. C) A 15 percent coupon bond with a price of $1,000. D) A 15 percent coupon bond with a price of $1,200. E) A 15 percent coupon bond with a price of $1,500. 12) Which of the following $1,000 face value securities has the highest yield to maturity? A) A 5 percent coupon bond selling for $1,000 B) A 10 percent coupon bond selling for $1,000 C) A 12 percent coupon bond selling for $1,000 D) A 12 percent coupon bond selling for $1,100 13) Which of the following $1,000 face value securities has the highest yield to maturity?...
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 Spring '08
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