J markin c) The beios is setline at par wahe 16) Hurbaim Corporation is preparing a bond offering with a covpon rate of 6 percent, paid scmianauafly, and a face value of 51,000 . The bonds will mafire in 10 years and will be seld at par Given this, which one of the following satements is correct? 3 marks TV=1000 A) The bonds will become discount boods if the market mate of interest declines Ay =2. 6 8) The bonds will pay 10 interest payments of 560 each C) The bonds will sell at a premium if the makket rate is 5.5 pertent D) The bonds will initially sell for $1,030 each E) The final payment will be in the amount of $1,060 PNTT= 17) Which one of the following bonds is the lenst sensitive to interest rate risk? 3 miarks A) 3-ycar; 4 perceat coupon 8) 3-year; 6 percent coupon c) 5 -year: 6 percent coupon D) 7-ycar, 6 percent coupon E) 7-ycar, 4 percent coupon 18) A zero coupon bond: 3 marks A) Is sold at a large premium B) Pays inferest that is tax deductible to the issuer at the time of payment C) Can only be issued by the U.S. Treasury D) Has more interest rate risk than a comparable coupon bond E) Provides no taxable income to the bondholder until the bond matures 2 anak. A) Qhated Frice a) Spread Price C) Clean Price D) Dirty Price c) Call Price 13) A six-ycar, $1,000 face value bond issted by Nguyen Corporation pays interest semaananally on February 1 and August 1. Assume today is Oetober 1. What is the exrrent difference, if any. between this bond's elean and dirty priees? 2 marks A) No Difference FV=1000 8) One Month's Interest C) Two Months' Interest D) Four Months Interest E) Five Months' Interest 14) The taxability risk premium compensates bondholders for which one of the following? 2 marks A) Yieid decreases in response to market changes 8) Lack of coupon puyments c) Possibility of definult (D) A bond's unfavorable tax status E) Decrease in a municipality's credit rating J markin c) The beios is setline at par wahe 16) Hurbaim Corporation is preparing a bond offering with a covpon rate of 6 percent, paid scmianauafly, and a face value of 51,000 . The bonds will mafire in 10 years and will be seld at par Given this, which one of the following satements is correct? 3 marks TV=1000 A) The bonds will become discount boods if the market mate of interest declines Ay =2. 6 8) The bonds will pay 10 interest payments of 560 each C) The bonds will sell at a premium if the makket rate is 5.5 pertent D) The bonds will initially sell for $1,030 each E) The final payment will be in the amount of $1,060 PNTT= 17) Which one of the following bonds is the lenst sensitive to interest rate risk? 3 miarks A) 3-ycar; 4 perceat coupon 8) 3-year; 6 percent coupon c) 5 -year: 6 percent coupon D) 7-ycar, 6 percent coupon E) 7-ycar, 4 percent coupon 18) A zero coupon bond: 3 marks A) Is sold at a large premium B) Pays inferest that is tax deductible to the issuer at the time of payment C) Can only be issued by the U.S. Treasury D) Has more interest rate risk than a comparable coupon bond E) Provides no taxable income to the bondholder until the bond matures 2 anak. A) Qhated Frice a) Spread Price C) Clean Price D) Dirty Price c) Call Price 13) A six-ycar, $1,000 face value bond issted by Nguyen Corporation pays interest semaananally on February 1 and August 1. Assume today is Oetober 1. What is the exrrent difference, if any. between this bond's elean and dirty priees? 2 marks A) No Difference FV=1000 8) One Month's Interest C) Two Months' Interest D) Four Months Interest E) Five Months' Interest 14) The taxability risk premium compensates bondholders for which one of the following? 2 marks A) Yieid decreases in response to market changes 8) Lack of coupon puyments c) Possibility of definult (D) A bond's unfavorable tax status E) Decrease in a municipality's credit rating