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1to 7 Part II. Multiple Choice Questions (2 points each) A 10 year corporate bond pays a 75% couponrate is 7% and the bond pays
1to 7 Part II. Multiple Choice Questions (2 points each) A 10 year corporate bond pays a 75% couponrate is 7% and the bond pays interest semiannually? (Par value of the bond is $1000) A) $1175.32 B) $1181.47 C) $1035.53 D) S1052.97 E) $1222.18 1 what isthe bors price if the required return The quoted ask yield on a 12 year S1000 par T-Bond with a 5% coupon and a price quote of 106-10 is (use semiannual compounding) A) 5.00% B) 4.32% C) 4.36% D) 2.16% E) 2.18% 2. 3. Which of the following statement is correct? A) Duration is the elasticity of a security's value to small coupon changes B) Duration is the time when all coupon payments are paid back. C) Duration of a premium coupon bond is longer than time to maturity D) Duration of a zero-coupon bond is the same as the time to maturity. 4. The the coupon rate and the the maturity; the less price sensitive the bond is. A) higher, longer B) higher, shorter C) lower, shorter D) lower, longer A decrease in interest rates will A) 5. Increase the bond's price B) C) Decrease the bond's duration Lower the bond's coupon rate D) Change the bond's payment frequency the duration but at a(n)rate. As the maturity of a bond A) decreases; decreases; increasing B) increases; increases; increasing C) decreases; increases; decreasing D) increases; increases; decreasing 6. A 2 year maturity 10% coupon annual payment corporate bond with a required rate of retun 10% has a duration of A) 1.05 B) 1.97 C) 1.22 D) 1.91 E) 1.40 7, years
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