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%