1.

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of 1,000, 25 years to maturity, and a coupon rate of 6.3 percent paid annually. If the yield to maturity is 7.4 percent, what is the current price of the bond?

2.

A $1,000 par value corporate bond that pays $45 annually in interest was issued last year. Which one of these would apply to this bond today if the current price of the bond is $989.42?

Multiple Choice

• The coupon rate has increased to 7 percent.

• The bond is currently selling at a premium.

• The current yield exceeds the yield to maturity.

• The bond is selling at par value.

• The current yield exceeds the coupon rate.