10. You are a bond manager, looking for arbitrage opportunity in a 2-year 8% annual payment treasury coupon bond 2-year treasury spot rate 8.465% at 5998 today. Suppose, you also observe the following data for today's mardet: -year pure discount treasury bond trading at $950 Is there arbitrage opportunity? What should you buy and sell?? A. No, all bonds are fairly priced B. Yes, there a re is arbitrage profit to make. Buy the package of STRIPS and sell the treasury coupon bond s, $4 arbitrage profit to make. Buy the coupon bond and sell the package of STRIPS D. depends on YTM 11. On e year ago, Alpha Supply issued 15-year bonds at par. The bonds have a coupon rate of 6.5 percent and pay in terest annually. Today, the market rate of interest on these bonds is 7.2 percent. How does the price of these bonds today compare to the issue price? A. increase B. decrease. C. remain unchanged. nto datermine 12. A $1,000 face value bond currently has a yield to maturity of 6.69 percent. The bond matures in three years and pays interest annually. The coupon rate is 7 percent. What is the current price of this bond? A. $949.60 B. $1,005.26 C. $1,008.18 D. $1,010.13 13. An investor purchases the bonds of JLD Corp., which pay an annual coupon of 10% and mature in 10 years, at an annual yield to maturity of 12%. The bonds will most likely be selling at: A. A discount B. A premiunm C. Par D. depends on market price A 7.5% coupon, semiannual-pay, five-year bond has a yield to maturity of 6.80%. Over the next year, if the bonds yield to maturity remains unchanged, its price will: A increase B. decrease. 14. C. remain unchanged. D. not enough information to determine Deltona Motors just issued 225,000 pieces of zero coupon bonds. Each piece matures in 20 years, has a par value of $1,000, and has a yield to maturity of 7.45 percent. What is the approximate total amount of money the company 15. raised from issuing these bonds? (Assume semiannual compounding.) A $48.20 million B. $52.10 million C. $55.14 million D. $162.08 million 16. A 3-year spot rate is least likely the: A. yield-to-maturity on a 3-year coupon bond. B. yield-to-maturity on a 3-year zero-coupon bond. C. appropriate discount rate on the year 3 cash flow for a 10-year bond D. none of above