ABC company issued a new bond on January 1, 2018 which has an annual coupon rate of 9 percent, a par value of 1,000 dollar, and a maturity of 6 years. Coupon payments are made semi-annually (i.e., on June 30 th and December 31 st of each year). What was the percentage capital gain (or loss) on this bond on July 1, 2021 when the yield-to-maturity (YTM) on it was 8 percent (annually):

-3.258 percent

+3.258 percent

-0.804 percent

+8.804 percent

-2.408 percent

q2.Which of the following statements is true?

The principle we always rely upon to determine the value of an asset is the following: The value of an asset is equal to the present value of the future cash flows the asset will generate to its owner.

If a bond is selling at a premium to par value then its current yield will be lower than the yieldto-maturity on that bond and the capital gain on that bond will be positive.

Suppose you want to make a quick speculative profit in the bond market, and you are firmly convinced that interest rates will rise. To become rich fast, you should purchase bonds and specifically long-term zero-coupon-rate bonds.

All the provided responses to this question are true.

All the provided responses to this question are false.

q3. A bank is offering to lend you now 50,000 dollars, but you have to pay back every year the amount of 20,817.45 dollars over a period of three years. The partial principal repayment at the end of the second year will be:

$14,817.45

$14,333.33

$10,408.73

$16,666.67

$16,595.54

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