1. Which one of the following bonds is the most interest rate sensitive?

10-year, 5% coupon rate bond

10-year, 2% coupon rate bond

5-year, 5% coupon rate bond

5-year, 2% coupon rate bond

2. The high-yield bond is more likely to have a higher default risk.

True

False

3. The current yield on a bond is equal to the annual interest divided by which one of the

following?

Issue price

Face amount

Current market price

Current par value

4. If a bond's current yield exceeds its coupon rate, the bond is selling at:

a discount.

par.

a premium.

5. A bond has a face value of $1,000, a market price of $1,112, and pays $81 in interest every

year. What is the coupon rate?

4.05%

4.50%

8.10%

9.00%

6. What is the price of a $1,000 face value bond if the quoted price is 102.01?

$102.10

$1,020.01

$1,020.10

$1,021.00

7. Analyze the 10-year, 8% coupon rate (semi-annual payment), $1,000 par value bond. The

bond currently sells for $1,318. What's the bond's yield to maturity?

5.36%

4.10%

2.05%

6.15%

8. Analyze the 10-year, 8% coupon rate (semi-annual payment), $1,000 par value bond. The

bond currently sells for $1,318. What's the bond's current yield, and capital gain yield?

6.07%, 0.71%

6.07%, -0.71%

6.07%, 1.97%

6.07%, -1.97%

9. An 8% $1,000 bond matures in 13 years, pays interest annually, and has a yield to maturity of

9.5%. What is the current market price of the bond?______

$889.35

$1,000

$890.63

$903.62

10. If you earned a rate of return of 8% on your bond investments last year. During that time the

inflation rate was 2.68%. What is your real rate of return?

5.18%

4.17%

3.68%

6.20%