1. A bond with a 6% coupon matures in 10 years, pays interest semi-annually, and has a yield-to-maturity of 7.0 percent. What is the he current market price?

2. If the capital-gains yield on a bond is predicted to be positive over the next year, then?

3. A callable bond pays an annual (i.e., one payment per year) coupon of 5 percent, has a par value of $1,000, matures in 15 years and is callable after five years at a price of 105. If the bond has a price of 99.500 today, then the yield to call on this bond is ?

4. A US Treasury bond with a 3.00% coupon and a par value of $100,000 is sold on September 1 at a price of 102:21. The dirty price would be closest to?

5.An investor is deciding between adding a corporate bond (i.e., taxable interest) and a municipal bond (i.e., interest not taxed) to her portfolio. Both bonds sell at par value and appear to have equal risk. If the coupon rate on the corporate is 5.50% and the coupon rate on the municipal is 4.25%, what approximate marginal-tax rate would make an investor indifferent between owning the bonds.

6. A bond will sell at a premium when the coupon rate is/?

7. The 5.5 percent coupon bonds of ABC Corp. are currently selling at a price of 103.580 and have 9 years remaining until maturity. The current yield is closest to?

8. A bond has a coupon rate of 6 percent, with payments semi-annually. It matures in 2.5 years and has a yield to maturity of 7 percent (15 points).

a. Use the long method to determine the duration and modified duration of this bond?

b. If the yield to maturity increases to 9 percent, what is the approximate percent change in price based on the modified duration calculated in a?

. c.What is the actual percentage change in price if the yield to maturity increases to 9 percent? d. What is a reason for the difference in prices between b and c?

d. What is a reason for the difference in prices between b and c?

.9. Bonds that are characterized as hi-yield have one specific characteristic in common what is the characteristic?

Now, in comparing a hi-yield bond to a bond that is not hi -yield, list three financial characteristics of the bond issuer (i.e., characteristics of their financial statements) that could have contributed to the hi-yield factor?

a. What is the difference between a spot curve and a forward curve?

b. What is the most common interpretation of an inverted yield curve, and what is a common way of measuring the inversion?

c. A par-curve is typically developed from on the run sovereign debt issues (which means the most recently issued debt for each maturity). What is the difference between a spot curve and the par curve?

10. How would you explain the pure expectations theory of the term structure of interest rates to someone who is untrained in finance?