1

1. Which one of the following does an issuer pay to redeem a bond prior to maturity?

   par value

   face value

   put price

   call price

   discounted price

0.5 points

QUESTION 2

1. Which one of the following statements is correct concerning premium bonds?

   The premium increases when interest rates increase.

   The coupon rate is less than the current yield.

   As the time to maturity decreases, the premium increases.

   The yield to maturity is less than the coupon rate.

   The par value exceeds the face value.

0.5 points

QUESTION 3

1. Which one of the following will occur if a bond's discount rate is lowered?

   market price will increase

   coupon payment amount will decrease

   current yield will increase

   call premium will increase

   coupon rate will decrease

0.5 points

QUESTION 4

1. A bond has a par value of $1,000 and a coupon rate of 6.5 percent. What is the dollar amount of each semiannual interest payment if you own 8 of these bonds?

   $180

   $260

   $320

   $420

   $840

0.5 points

QUESTION 5

1. Which one of the following statements is correct concerning discount bonds?

   The current yield is less than the yield to maturity.

   The bonds will be redeemed at maturity for less than face value.

   The coupon rate is greater than the current yield.

   The clean price is greater than the dirty price.

   Only zero-coupon bonds sell at a discount.

0.5 points

QUESTION 6

1. The yield-to-maturity assumes which one of the following?

   The bond is purchased at par value.

   All interest payments earn the latest rate of market interest.

   The bond is called on the earliest possible date.

   The bond is a pure discount bond.

   All coupon payments are reinvested at the yield-to-maturity rate.