1. An analyst observes a 5-year, 10% semiannual-pay bond. The face value is $1,000. The analyst believes that the yield to maturity on semiannual bond basis should be 15%. Based on this yield estimate, the price of this bond would be: * A. $828.40 B. $1,189.53 O C. $1,193.04 O D. $1,180.02 O E. None of the above. 2. A bond that matures in 6 years sells for $950. The bond has a face value of $1,000 and a 5.5% annual coupon. What is the bond's current yield? * A. 5.50% B. 6.00% C. 5.79% O D. 6.25% O E. None of the above. 3. A bond that matures in 6 years sells for $950. The bond has a face value of $1,000 and a 5.5% annual coupon. What is the bond's yield to maturity, YTM?* A. 5.50% B. 5.79% C. 6.00% D. 6.49% O E. None of the above. 7. Morin Company's bonds mature in 10 years, have a par value of $1,000, and make an annual coupon interest payment of $60. The market requires an interest rate of 8% on these bonds. What is the bond's price? * A. $865.80 B. $925.62 C. $948.76 D. $972.48 O E. None of the above. 4. Sadik Inc.'s bonds currently sell for $1,180 and have a par value of $1,000. They pay a $100 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,100. What is their yield to call (YTC)? * A. 6.63% B. 6.98% C. 7.35% D. 7.37% O E. None of the above. 5. Suppose 10-year T-bonds have a yield of 5.30% and 10-year corporate bonds yield 6.75%. Also, corporate bonds have a 0.25% liquidity premium versus a zero liquidity premium for T-bonds, and the maturity risk premium on both Treasury and corporate 10-year bonds is 1.15%. What is the default risk premium on corporate bonds? * O A. 1.08% B. 1.20% C. 1.32% O D. 1.45% O E. None of the above. 6. A company has two $1,000 face value bonds outstanding bond selling for $701.22. the first issue has an annual coupon of 8% and 20 years to maturity. The second bond has the same yield to maturity as the first bond but has only five years remaining until maturity. The second issue pays interest annually as well. What is the annual interest payment on the second issue? * O A. $18.56. B. $27.18. C. greater than $30.00. D. none of the above. O E. Cannot be determined. 8. 5-year Treasury bonds yield 5.5%. The inflation premium (IP) is 1.9%, and the maturity risk premium (MRP) on 5-year T-bonds is 0.4%. There is no liquidity premium on these bonds. What is the real risk-free rate, r*?* A. 2.59% B. 3.20% C. 2.88% D. 3.52% O E. None of the above. 9. A 7.5% coupon, semiannual-pay, five-year bond has a yield to maturity of 6.80%. over the next year, if the bond's yield to maturity remains unchanged, its price will: * A. increase B. decrease. C. remain unchanged. D. Cannot be determined. E. None of the above. 10. J&J Company's bonds mature in 10 years, have a par value of $1,000, and make an annual coupon interest payment of $75. The market requires an interest rate of 8% on these bonds. What is the bond's price? * A. $966.45 B. $925.62 O C. $948.76 O D. $972.48 O E. None of the above. 11. Jack Long, CFA, is evaluating the retirement account of John Smith. Smith currently has $500,000 and will retire in 12 years. If Smith needs $2 million at retirements, the return required is closest to: * A. 11.0% B. 10.0% C. 12.25%. D. 13.0% O E. None of the above. 12. Michelle is thinking about two different investments options each for 4 years and interest rate is 5% annually: Option A: Receive four end of year payments each of $3,000. Option B: Receive four payments of $2,000, $3,000, $5,000 and $2,000 for the first, second, third and fourth year respectively. Which option has the higher present value? * A. Option A B. Option B C. Both options have the same present value D. Cannot be determined O E. None of the above. 13. Jack has now $1,000. How much would he have after 6 years if he leaves it invested at 5.5% with annual compounding? * A. $1,378.84 B. $1,622.20 C. $1,654.95 O D. $1,678.84 E. None of the above. 14. George is 45 years old. He is planning to have $1,000,000 when he retires at 65. He decided to start saving deposits at the beginning of each year at the National Bank at a rate of 6%, compounded annually. What must his annual deposit be to reach his goal? * A. $50,000.00 B. $27,184.56 C. $25,645.82 D. $114,369.11 E. None of the above. 15. You plan to invest in bonds that pay 4.0%, compounded annually. If you invest $20,000 today, how many years will it take for your investment to grow to $30,000?* A. 5.37. B. 7.74. C. 8.27. O D. 10.34. E. None of the above. 16. At a rate of 6.5%, what is the future value of the following cash flow stream? Year O: $0, Year 1: $75, Year 2: $225, Year 3: $0, Year 4: $300. A. $526.01. B. $553.69. C. $582.83. D. $645.80. O E. None of the above. 17. Visa Card and other credit card issuers must by law print the Annual Percentage Rate(APR) on their monthly statements. If the APR is stated to be 24.00%, with interest paid monthly, what is the card's EAR%?* A. 18.58%. B. 19.56%. C. 25.44%. D. 21.57%. E. None of the above. 18. You estimate that you will need about $80,000 to send your child to college in eight years. You have about $35,000 now. At what rate will you just reach your goal? A. 11.28% B. 10.88% C. 9.85% D. 12.14% E. None of the above. 19. A client plans to retire in 15 years and will need to withdraw $50,000 from his retirement account each year for 10 years, beginning on the day he retires. After that, he will need to withdraw $20,000 per year for 25 years. The account returns 4% annually. The amount he needs to have in the account on the day he retires is closest to: * A. $580,000. B. $640,000. C. $655,000. D. $670,000. O E. None of the above. 20. Three years from now, an investor will deposit the first of eight $1,000 payments into a special fund. The fund will earn interest at the rate of 5% per year until the third deposit is made. Thereafter, the fund will return a reduced interest rate of 4% compounded annually until the final deposit is made. How much money will the investor have in the fund at the end of ten years assuming no withdrawals are made? * A. $8,872.93. B. $9,251.82. O C. $9,549.11. D. Cannot be determined. E. None of the above