1. If a 7% coupon rate (annual payment), 7-year coupon bond is currently worth $918.38, how much will it be worth one year from now if the YTM of the bond remain unchanged? A) $1000.00

B) $975.39

C) $927.36

D) $830.78 42.

2. A coupon bond that matures in 10 years sells for $985.85. The bond has a par value of $1,000 and a 6% semi-annual coupon. What is the bonds YTM?

A) 6.19%

B) 7.20%

C) 7.65%

D) 7.88% 43.

3. What is the rate of return for an investor who pays $1,054.47 for a three-year bond with a 8% coupon and sells the bond one year later for $1,037.19?

A) 5.95%

B) 6.55%

C) 7.23%

D) 7.55% 44.

4. A coupon bond that matures in 10 years sells for $950 with $1,000 par. The bond currently yields 6.488%. What is the bonds coupon rate if coupons are paid in semi-annual base?

A) 5.80%

B) 6.30%

C) 7.00%

D) 7.50%

5. Which of the following statements is not correct?

A) All else equal, if a bonds YTM increases, its price will fall.

B) All else equal, if a bonds YTM increases, its current yield will increase.

C) If a bonds coupon rate exceeds its YTM, the bond will sell at a premium over par.

D) If a bonds YTM exceeds its coupon rate, the bond will sell at par 46.

6. Which of the following statements is correct?

A) The shorter the time to maturity, the greater the change in the value of a bond in response to a given change in interest rates.

B) The longer the time to maturity, the smaller the change in the value of a bond in response to a given change in interest rates.

C) The zero coupon bond will experience the smaller percentage of price change in response to a given change in interest rates.

D) The zero coupon bond will experience the larger percentage of price change in response to a given change in interest rates.

7. An investor buys a ten-year, zero coupon bond for $425.75. What is the YTM of the bond?

A) 8.00%

B) 8.23%

C) 8.65%

D) 8.91%

8. A 10-year, 7.35% coupon bond (annual payment) has a par value of is the bonds current yield and yield to maturity?

A) Current yield = 7.50%; YTM = 8.20%

C) Current yield = 7.12%; YTM = 8.20%

B) Current yield = 7.50%; YTM = 7.61%

D) Current yield = 7.12%; YTM = 7.61%

9. The price of a 3-year bond with an 8% coupon rate (annual payment) will _____ when the market interest increases by 1%? A) increase of $51.54

B) decrease of $51.54

C) increase of $25.31

D) decrease of $25.31

10.What is the rate of return for an investor who pays $1,010 for a three-year bond with a 6% coupon and sells the bond one year later for the price carrying 6% YTM?

A) 2.94%

B) 3.90%

C) 5.46%

D) 4.95%