6. OSM Co. bonds have a 15-year maturity, an 8.4% semiannual coupon, and a par value of $1,000. The going interest rate (rd) is 6.40%, based on semiannual compounding. What is the bonds price? *

A. $1,047.19

B. $1,074.05

C. $1,191.03

D. $1,129.12

E. None of the above.

7. An annual-pay, 4% coupon, 10-year bond has a yield to maturity of 5.2%. If the price of this bond is unchanged two years later, its yield to maturity at that time is: *

A. 5.2%.

B. less than 5.2%.

C. greater than 5.2%.

D. Cannot be determined.

E. None of the above.

8. One year ago, an investor purchased a 10-year, $1,000 par value, 8% semiannual coupon bond with an 8% yield to maturity. Now, one year later, interest rates remain unchanged at 8%. If the investor sells the bond today (immediately after receiving the second coupon payment, and with no transaction costs), he will have: *

A. a capital gain of $80.

B. a capital loss of $80.

C. no capital gain or loss.

D. cannot be determined.

E. None of the above.

9. Kelly Inc's 5-year bonds yield 7.50% and 5-year T-bonds yield 4.90%. The real riskfree rate is r* = 2.5%, the default risk premium for Kelly's bonds is DRP = 0.40%, the liquidity premium on Kelly's bonds is LP = 2.2% versus zero on T-bonds, and the inflation premium (IP) is 1.5%. What is the maturity risk premium (MRP) on all 5-year bonds? *

A. 0.73%

B. 0.81%

C. 0.90%

D. 0.99%

E. None of the above.

10. Niendorf Corporation's 5-year bonds yield 8.00%, and 5-year T-bonds yield 4.80%. The real risk-free rate is r* = 2.75%, the inflation premium for 5-year bonds is IP = 1.65%, the default risk premium for Niendorf's bonds is DRP = 1.20% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP = (t 1) 0.1%, where t = number of years to maturity. What is the liquidity premium (LP) on Niendorf's bonds? *

A. 2.00%

B. 1.31%

C. 1.46%

D. 1.62%

E. None of the above.