1. A bond with a par value of 1000 is selling in the market at 800. The coupon interest rate on the bond is 9%. Calculate the current yield of the bond?

a. 11.4% b. 10% c. 11.25% d. 12.85%

2. A BBB bond has a face value of 1000 and a coupon rate of 6%. The interest is paid annually and the maturity is 5 years. The yield to maturity of the bond is 8%. What is the current price of the bond?

a. 239.56 b. 920.14 c. 721.41 d. 680.58

3. A CC bond has a face value of 100 and a coupon rate of 5%. The interest is paid annually and the maturity is 7 years. The yield to maturity of the bond is 4%. What is the current price of the bond?

a. 106 b. 79.79 c. 100 d. 110

4. As interest rate increases, the present value

a. increases b. decreases c. remains the same d. none of the above

5. If the YTM of the bond is greater than the coupon rate, the bond will be selling at?

a. Par b. Premium c. Discount d. None of the above