Question
Assume that you are considering the purchase of a 7-year bond with an annual coupon rate of 7.0%. The bond has face value of $1,000
Assume that you are considering the purchase of a 7-year bond with an annual coupon rate of 7.0%. The bond has face value of $1,000 and makes semiannual interest payments. If you require an 10.0% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?
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| A. | 851.52 |
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| B. | 1021.60 |
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| C. | 1000 |
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| D. | 729.30 |
A 29-year, $1,000 par value bond has an 9.25% annual coupon. The bond currently sells for $945. If the yield to maturity remains at its current rate, what will the price be 4 years from now?
|
| A. | 945.00 |
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| B. | 946.77 |
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| C. | 940.85 |
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| D. | 982.90 |
Consider some bonds with one annual coupon payment of 9.00%. The bonds have a par value of $1,000, a current price of $1,100, and they will mature in 18 years. What is the yield to maturity on these bonds?
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| A. | 6.50% |
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| B. | 7.94% |
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| C. | 8.18% |
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| D. | 9.00% |
If 10-year T-bonds have a yield of 5.5%, 10-year corporate bonds yield 9.5%, the maturity risk premium on all 10-year bonds is 2.0%, and corporate bonds have a 0.1% liquidity premium versus a zero liquidity premium for T-bonds, what is the default risk premium on the corporate bond?
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| A. | 1.90% |
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| B. | 4.00% |
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| C. | 2.00% |
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| D. | 3.90% |
Ezzell Enterprises noncallable bonds currently sell for $1,040. They have a 12-year maturity, an annual coupon of $90, and a par value of $1,000. What is their yield to maturity?
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| A. | 8.65% |
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| B. | 9.25% |
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| C. | 9.00% |
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| D. | 8.46% |
McCue Inc.s bonds currently sell for $1,200. They pay a $100 annual coupon, have a 14-year maturity and a $1,000 par value, but they can be called in 4 years at $1,140. Assume that no costs other than the call premium would be incurred to call and refund the bonds, and also assume that the yield curve is horizontal, with rates expected to remain at current levels into the future. What is the difference between this bonds YTM and its YTC? (Subtract the YTC from the YTM.)
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| A. | 1.30% |
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| B. | 0.96% |
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| C. | 0.42% |
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| D. | 0.22% |
A bond is currently priced at $1,100 on a par value of $1,000. Its term to maturity is 10 years and its coupon rate is 7.50% (stated annually, paid semiannually). If you buy the bond, and hold it to maturity, what would be the yield to maturity?
|
| A. | 7.50% |
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| B. | 9.00% |
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| C. | 6.15% |
|
| D. | 11.00% |
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Sustainable Finance And Banking
Authors: Marcel Jeucken
1st Edition
1853837660, 978-1853837661
