BusM 201 Chapter 6 Practice Exam EZ Answer

A 600 b 628 c 1200 d 1256 feedback mode end fv

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Unformatted text preview: a. 6.00% b. 6.28% c. 12.00% d. 12.56% Feedback: Mode = End FV = 1,000 N = 10X2 I = 8.93%/ 2 PMT = ? = 60 PV = -1,200 Coupon = (60X2)/1000 = 12% 6. As the market interest rate go up, what happened to the price of existing bonds? a. Goes up b. Goes down c. Stays the same d. Not enough information Feedback: Interest rate and price of a bond has an inverse relationship 7. If a bond currently sold at $949.47 with YTM of 12% and annual coupon rate of 11% paid semi-annually, in how many years does the bond mature? a. 4 years b. 6 years c. 8 years d. 10 years e. None of the above Feedback: Mode = End FV = 1,000 N = ? = 16 I = 12%/2 PMT = 1000*0.11/2 PV = -949.47 Since it is semi-annual, 16/2 = 8 8. If the bond is currently sold at its premium, what is the relationship between YTM, coupon rate, and current yield? a. YTM = CY = Coupon b. YTM < CY > Coupon c. YTM < CY < Coupon d. YTM > CY > Coupon 9. Suppose you pay $508 for a zero-coupon bond that had 10 years left to maturity. Assuming annual compounding, what is your...
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This note was uploaded on 01/11/2014 for the course FIN 201 taught by Professor Pinegar during the Fall '13 term at BYU.

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