(1)

On 1 July 2010, Pioneer Limited issued bonds with a face value of $1,000,000 that matures on 1 July 2020. The bond certificate indicates that the stated coupon rate for this bond is 10% per annum and the yield to maturity is 8% per annum.

Calculate the annual coupon payment.

Select one:

a. $1,134,201.63

b. $1,000,000.00

c. $100,000.00

d. $80,000.00

(2)

On 1 July 2010, Pioneer Limited issued bonds with a face value of $1,000,000 that matures on 1 July 2020. The bond certificate indicates that the stated coupon rate for this bond is 10% per annum and the yield to maturity is 8% per annum.

Calculate the bond price on 1 July 2010.

Select one:

a. $1,134,201.63

b. $1,000,000.00

c. $80,000.00

d. $100,000.00

(3)

On 1 July 2010, Pioneer Limited issued bonds with a face value of $1,000,000 that matures on 1 July 2020. The bond certificate indicates that the stated coupon rate for this bond is 10% per annum and the yield to maturity is 8% per annum.

Calculate the current yield.

Select one:

a. 8.82%

b. 10.00%

c. 8.00%

d. -0.82%

(4)

On 1 July 2010, Pioneer Limited issued bonds with a face value of $1,000,000 that matures on 1 July 2020. The bond certificate indicates that the stated coupon rate for this bond is 10% per annum and the yield to maturity is 8% per annum.

Calculate the capital gain yield.

Select one:

a. 8.00%

b. -0.82%

c. 8.82%

d. 10.00%

(5)

On 1 July 2010, Pioneer Limited issued bonds with a face value of $1,000,000 that matures on 1 July 2020. The bond certificate indicates that the stated coupon rate for this bond is 10% per annum and the yield to maturity is 8% per annum.

This bond is trading at premium, par or discount.

Select one:

a. None of the above

b. Premium Bond

c. Discount Bond

d. Par Bond

(6)

On 1 July 2010, Pioneer Limited issued bonds with a face value of $1,000,000 that matures on 1 July 2020. The bond certificate indicates that the stated coupon rate for this bond is 10% per annum and the yield to maturity is 8% per annum.

What happens to the bond price till it reaches maturity?

Select one:

a. Stays constant

b. Decrease

c. None of the above

d. Increase