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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%

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 bonds 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%

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