3. What would be the likely effect on a bond's yield to maturity of: ( LO-5) a. An increase in the issuing firm's times-interest-earned ratio? b. An increase in the issuing firm's debt-equity ratio? c. An increase in the issuing firm's quick ratio? 4. A coupon bond paying semiannual interest is reported as having an ask price of 117% of its $1,000 par value. If the last interest payment was made one month ago and the coupon rate is 6%, what is the inwoice price of the bond? ( 10 - ) 5. A zero-coupon bond with face value $1,000 and maturity of five years sells for $746.22. a. What is its yield to maturity? b. What will happen to its yield to maturity if its price falls immediately to $730 ? (\$N LO 10-2) 10. An investor believes that a bond may temporarily increase in eredit risk. Which of the following would be the most liquid method of exploiting this? ( LO 10-5) a. The purchase of a credit default swap. b. The sale of a credit default swap. c. The short sale of the bond. 12. You buy an eightyear maturity bond that has a 6% current yield and a 6% coupon (paid annually). In one year, promised yields to maturity have risen to 7%. What is your holding-period return? ( LO I0-3) 14. Which security has a higher effective annual interest rate? (O 10-6) a. A three-month T-bill with face value of $100,000 currently selling at $97,645. b. A coupon bond selling at par and paying a 10% coupon semiannually. 16. Consider a bond paying a coupon rate of 10% per year semiannually when the market interest rate is only 4% per half-year. The bond has three years until maturity. ( LO 10.6) a. Find the bond's price today and six months from now after the next coupon is paid. b. What is the total rate of return on the bond? 19. Return to Table 10.1, showing the cash flows for TIPS bonds. a. What is the nominal rate of return on the bond in year 2 ? b. What is the real rate of return in year 2 ? c. What is the nominal rate of return on the bond in year 3 ? d. What is the real rate of return in year 3? ( LO 10-6) 32. A 30 -year maturity. 8% coupon bond paying coupons semiannually is callable in five years at a call price of $1.100. The bond currently sells at a yield to maturity of 7%(3,5% per half-year). ( LO 10.4) a. What is the yield to call? b. What is the yield to call if the call price is only $1,050 ? c What is the yield to eall if the call price is $1,100 but the bond can be ealled in two years instead of five years