A corporate bond ($1,000 par value) with a 7% coupon, paid semi-annually, is rated BBB. It is currently trading in the secondary market for $965. Currently, the risk-free rate is 7.5%.

the question is

1:

The bond is selling at:

A:a discount

B:

a premium

C:

par value

D:	face value

2:

Since the bond was issued, interest rates have:

A:	remained the same

B:

declined

C:

increased

D:	It can not be determined from the information given.

3:

Is the bond investment-grade?

A:	Yes, because it is BBB- or above

B:	No, because it is BBB or lower.

C:No, because it is lower than A-.

D:Yes, because it is above C-.

3:

If you buy this bond, how much interest in $ will you receive each year from the issuer?

B:A:$140

C:

$35

D:$70

E:It can not be determined from the information given.

5:

What is the bonds current yield?

A:

7.00%

B:3.63%

C:

7.25%

D:It can not be determined from the information given.