1) The following bond is currently trading at $830.16; it has a par value of $1,000, pays...
Question:
1) The following bond is currently trading at $830.16; it has a par value of $1,000, pays 6% coupon annually, and has a time-to-maturity of 10 years. What is the yield-to-maturity (interest rate) of this bond? Group of answer choices
10.3%
9.2%
8.6%
9.7%
2) What is the (Macaulay) duration of a bond with the following characteristics: N = 4, PMT = 80, FV = 1000, I/Y = 10%?
Group of answer choices
3.92 years
3.56 years
3.10 years
3.76 years
3)
The Macaulay duration of a bond portfolio is 6.23 years, (assuming they pay coupon annually) and the yield to maturity of the bond portfolio is 14%. What is the approximate change in the value of the bond if interest rates increase by 3 percentage points (3%)?
Group of answer choices
Increase by 18.55%
Decrease by 18.55%
Increase by 16.39%
Decrease by 16.39%
4) Which of the following two statements is correct?
S1: The nominal risk-free rate of return is the sum of the real risk-free rate of return and the inflation risk premium.
S2: The maturity risk premium captures a bonds price risk and reinvestment risk.
Group of answer choices
Both statements are correct
S1 is correct but S2 is false
Both statements are false
S2 is correct but S1 is false