Bonds & Inflation Practice Quiz - FIN 300 Bonds Inflation Practice Quiz 1 Given the following information about a bond calculate the fair market

Bonds & Inflation Practice Quiz - FIN 300 Bonds...

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FIN 300 Bonds & Inflation Practice Quiz 1. Given the following information about a bond, calculate the fair market price: Face/Par Value = $1,000 Coupons paid semi-annually Coupon rate = 8% 20 years left to maturity Yield-to-maturity (YTM) = 6% 2. Given the following information about a bond, calculate the fair market price: Face/Par Value = $1,000 Coupons paid semi-annually Coupon rate = 9% 30 years left to maturity Yield-to-maturity (YTM) = 12% 3. A bond currently sells for $1200. The bond has a face value of $1250, pays semi- annual coupons at a 8% coupon rate, and has 10 years left until maturity. Answer the following two questions and give a brief reason for your answer. There is no need for calculation. a. Is the yield-to-maturity (YTM) above, below, or equal to the coupon rate? b. If the bond’s price suddenly jumped to $1300, what must have happened to the yield-to-maturity (YTM)? 4. A zero-coupon bond pays $100 (face value) at maturity, exactly 5 years from today. You notice that the bond sells (today) at a price of $90. What must be the yield-to-
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