Question
1.A bond has a face value of $1,045, a coupon rate of 7% and 11 years until maturity. If similar bonds have an average yield
1.A bond has a face value of $1,045, a coupon rate of 7% and 11 years until maturity. If similar bonds have an average yield of 6%, what price would you expect to pay for this bond?
2.Bond investors will experience capital gains when
A. | more bonds are called than issued over a given period of time. | |
B. | market interest rates are high and falling. | |
C. | market interest rates are high and rising. | |
D. | the required rate of return exceeds the risk-free rate of return. |
3.Unsecured bonds are backed by
A. | the issuer's good name. | |
B. | physical assets like real estate. | |
C. | financial assets held in trust by a third party. | |
D. | earnings from the project the debentures were issued to finance. |
4.Bond investors will experience capital gains when
A. | more bonds are called than issued over a given period of time. | |
B. | market interest rates are high and falling. | |
C. | market interest rates are high and rising. | |
D. | the required rate of return exceeds the risk-free rate of return. |
5
5.Mortgage Backed Securities are relatively safe investments EXCEPT
A. | when inflation is high. | |
B. | when home prices decline. | |
C. | when interest rates rise. | |
D. | when mortgage holders refinance frequently. |
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