1. If a City of Atlanta bond is issued at par and the next day the Fed hikes rates 50 bps, the City of Atlanta bond is now likely to trade at a ______.

2. If a bond is upgraded from AA to AAA, its YTM will ______.

3. A bond with a call feature: a) Is attractive because the immediate receipt of principal plus a premium produces

a high return

b) Is more apt to be called when interest rates are high because the interest saving will be greater

c) Will usually have a higher yield to maturity than a similar noncallable bond

d) None of the above

4. In which one of the following cases is the bond selling at a discount:

a) Coupon rate is greater than current yield, which is greater than yield to maturity

b) Coupon rate is less than current yield, which is less than yield to maturity

c) Coupon rate is less than current yield, which is greater than yield to maturity

5. Consider a 5-year bond with a 10% coupon selling at a yield to maturity of 8%. If interest rates remain constant, one year from now the price of the bond will be:

a) Higher

b) Lower

c) The Same