14. The McKeegan Corporation has two different bonds currently outstanding. Bond M has a face value of $20,000 and matures in 20 years. The bond makes no payments for the first six years, then pays $1,100 every six months over the subsequent eight years, and finally pays $1,400 every six months over the last six years. Bond N also has a face value of $20,000 and a maturity of 20 years; it makes no coupon payments over the life of the bond. If the required return on both these bonds is 7 percent compounded semiannually, what is the current price of bond M? Of bond N? *

a. Price M = $22,500; Price N= $20,000

b. Price M = $19,019; Price N= $5,051

c. Price M = $50,900; Price N= $9,315

d. Price M = $0; Price N= $8,555

e. None of the above

15. TL Corporation has bonds on the market with 14.5 years to maturity, a YTM of 6.8 percent, and a current price of $924. The bonds make semiannual payments. What must the coupon rate be on these bonds? *

a. 8%

b. 6.8%

c. 1.2%

d. 5.97%

e. None of the above

16. Ngata Corp. issued 12-year bonds 2 years ago at a coupon rate of 8.4 percent. The bonds make semiannual payments. If these bonds currently sell for 105 percent of par value, what is the YTM? *

a. 12%

b. 10.5%

c. 8.4%

d. 4.2%

e. None of the above

17. A Treasury bond has a 10% annual coupon and a 10.5% yield to maturity. Which of the following statements is CORRECT? *

a. The bond sells at a price below par.

b. The bond has a current yield less than 10%.

c. The bond sells at a discount.

d. a & c.

e. None of the above

18. J&J Company's bonds mature in 10 years, have a par value of $1,000, and make an annual coupon interest payment of $75. The market requires an interest rate of 8% on these bonds. What is the bond's price? *

a. $966.45

b. $925.62

c. $948.76

d. $972.48

e. None of the above

19. Tosh. Inc.'s bonds currently sell for $980 and have a par value of $1,000. They pay a $95 annual coupon and have a 12-year maturity, but they can be called in 3 years at $1,150. What is their yield to call (YTC)? *

a. 7.73%

b. 7.50%

c. 7.91%

d. 8.12%

e. None of the above

20. A bond has a par value of $1,000, a time to maturity of 10 years, and a coupon rate of 8% with interest paid annually. If the current market price is $750, what is the capital gain yield of this bond over the next year? *

a. 1.85%

b. 8%

c. 10%

d. 3.5%

e. None of the above