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Having trouble with this homework if anyone can provide assitance it would be helpful 1.An investor is in a 30% tax bracket. If corporate bonds

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Having trouble with this homework if anyone can provide assitance it would be helpful

image text in transcribed 1.An investor is in a 30% tax bracket. If corporate bonds offer 5% yields, what must municipals offer for the investor to prefer them to corporate bonds? Round to two decimal places. 2. Find the equivalent taxable yield of a short-term municipal bond currently offering yields of 2 brackets of zero, 10%, 20%, and 30%. (Round your answers to 2 decimal places. Omit t in your response.) Zero 10% 20% Equivalent Taxable Yield % % % 30% % 3. A bond with par value of $1,000 has an annual coupon rate of 4.2% and currently sells for $970. What is the bond's current yield? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) 4. Treasury bonds paying an 9.4% coupon rate with semiannual payments currently sell at par coupon rate would they have to pay in order to sell at par if they paid their coupons annually is the effective annual yield on the bond?) (Round your answer to 2 decimal places. Omi sign in your response.) Effective annual yield % 5. The current yield on a bond is equal to annual interest payment divided by the current market price. the yield to maturity. annual interest divided by the par value. the internal rate of return. None of the options 6. If a 7% coupon bond is trading for $975.00, it has a current yield of 7.00%. 6.53%. 7.24%. 8.53%. 7.18%. 7. A coupon bond pays annual interest, has a par value of $1,000, matures in 12 years, has a coupon rate of 11%, and has a yield to maturity of 12%. The current yield on this bond is 10.39%. 10.43%. 10.58%. 11.73%. None of the options 8. Ceteris paribus, the price and yield on a bond are positively related. negatively related. sometimes positively and sometimes negatively related. not related. indefinitely related. 9. The ______ is a measure of the average rate of return an investor will earn if the investor buys the bond now and holds until maturity. current yield dividend yield P/E ratio yield to maturity discount yield 10. A coupon bond is a bond that pays interest on a regular basis (typically every six months). does not pay interest on a regular basis, but pays a lump sum at maturity. can always be converted into a specific number of shares of common stock in the issuing company. always sells at par. None of the options 11. Callable bonds are called when interest rates decline appreciably. have a call price that declines as time passes. are called when interest rates increase appreciably. are called when interest rates decline appreciably and have a call price that declines as time passes. have a call price that declines as time passes and are called when interest rates increase appreciably. 12. A coupon bond that pays interest of $100 annually has a par value of $1,000, matures in five years, and is selling today at a $72 discount from par value. The yield to maturity on this bond is 6.00%. 8.33%. 12.00%. 60.00%. None of the options 13. Consider two bonds, A and B. Both bonds presently are selling at their par value of $1,000. Each pays interest of $120 annually. Bond A will mature in five years, while bond B will mature in six years. If the yields to maturity on the two bonds change from 12% to 10%, both bonds will increase in value, but bond A will increase more than bond B. both bonds will increase in value, but bond B will increase more than bond A. both bonds will decrease in value, but bond A will decrease more than bond B. both bonds will decrease in value, but bond B will decrease more than bond A. None of the options 14. A zerocoupon bond has a yield to maturity of 9% and a par value of $1,000. If the bond matures in eight years, the bond should sell for a price of _______ today. 422.41 $501.87 $513.16 $483.49 None of the options 15. A coupon bond pays interest semiannually, matures in five years, has a par value of $1,000 and a coupon rate of 12%, and an effective annual yield to maturity of 10.25%. The price the bond should sell for today is $922.77. $924.16. $1,075.80. $1,077.20. None of the options 16. The ________ is used to calculate the present value of a bond. nominal yield current yield yield to maturity yield to call None of the options 17. A bond will sell at a discount when the coupon rate is greater than the current yield and the current yield is greater than yield to maturity. the coupon rate is greater than yield to maturity. the coupon rate is less than the current yield and the current yield is greater than the yield to maturity. the coupon rate is less than the current yield and the current yield is less than yield to maturity. None of the options is true. 18. Subordination clauses in bond indentures may restrict the amount of additional borrowing the firm can undertake. are always bad for investors. provide higher priority to senior creditors in the event of bankruptcy. All of the options are true. may restrict the amount of additional borrowing the firm can undertake and provide higher priority to senior creditors in the event of bankruptcy. 19. Debt securities are often called fixedincome securities because the government fixes the maximum rate that can be paid on bonds. they are held predominantly by older people who are living on fixed incomes. they pay a fixed amount at maturity. they promise either a fixed stream of income or a stream of income determined by a specific formula. they were the first type of investment offered to the public, which allowed them to "fix" their income at a higher level by investing in bonds. 20. What is the relationship between the price of a straight bond and the price of a callable bond? The straight bond's price will be higher than the callable bond's price for low interest rates. The straight bond's price will be lower than the callable bond's price for low interest rates. The straight bond's price will change as interest rates change, but the callable bond's price will stay the same. The straight bond and the callable bond will have the same price. There is no consistent relationship between the two types of bonds. 21. A coupon bond that pays interest of $90 annually has a par value of $1,000, matures in nine years, and is selling today at a $66 discount from par value. The yield to maturity on this bond is 9.00%. 10.15%. 11.25%. 12.32%. None of the options 22. The curvature of the priceyield curve for a given bond is referred to as the bond's modified duration. immunization. sensitivity. convexity. tangency. 23. You purchased a share of stock for $12. One year later you received $0.25 as a dividend and sold the share for $12.92. What was your holding period return? 9.75% 10.65% 11.75% 11.25% None of the options 24. You have been given this probability distribution for the holdingperiod return for a stock: What is the expected variance for the stock? 142.07% 189.96% 177.04% 128.17% None of the options 25. You have been given this probability distribution for the holdingperiod return for GM stock: What is the expected holdingperiod return for GM stock? 10.4% 11.4% 12.4% 13.4% 14.4%

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