On January 4th, 2017, Zack purchased a corporate bond of FGH Inc. at its market price of $1035.  The bond pays a 3.25 percent coupon rate, which is paid out semi-annually, based on its face value of $1,000.  The bond will mature on July 5th, 2024.

 

What would be dollar amount of each semi-annual coupon? (1 Mark)

	$16.25
	$14.75
	$15.50
	$15.75
	$17.15

 

Based on the market purchase price of $1035, what would be the current yield that Zack would be receiving on these bonds? (2 Marks)

	4.05%
	2.72%
	2.98%
	3.09%
	3.14%

 

What is the current yield to maturity that he would be receiving? (2 Marks)

	3.23%
	2.52%
	3.02%
	2.88%
	3.37%

 

 

On April 1st, 2018, Yugo purchased a corporate bond of IJK Limited for its face value of $1,000.  The bond pays a 2.5 percent coupon rate, which are paid semi-annually, and it will be maturing on April 1st, 2028.  On April 1st, 2020, similar bonds are paying a coupon rate of 2.75 percent, and Yugo plans to sell this bond.

 What would be the dollar amount of each semi-annual coupon, Yugo would receive? (1 Mark)

	$12.50
	$12.00
	$11.55
	$11.50
	$10.95

 

What would be the market price of the IJK bonds on April 1st, 2020, based on the market coupon rate? (2 Marks)

	$995.15
	$1000.00
	$943.78
	$951.42
	$982.16

 

What would be the capital gains/loss ($ dollar amount) would Yugo receive from selling the IJK bond? (1 Mark)

	$12.10
	-$18.50
	$9.25
	-$17.84
	$19.42

 

What would be the capital gains/loss (% percent return) would Yugo receive from selling the IJK bond? (1 Mark)

	-1.78%
	-1.58%
	-1.85%
	0.92%
	1.94%

 

  

LMN Limited issued new preferred shares that will start pay a $1.5 annual dividend per share beginning in 4 years from now (or at the end of year 3).

If the current market required return is 6.75 percent what should be the share price 4 years from now? (1 Mark)

	$21.27
	$24.46
	$19.35
	$22.22
	$20.15

 

If the current market required return is 6.75 percent what would be the present share price? (1 Mark)

	$18.58
	$17.11
	$15.90
	$16.36
	$16.86

 

If the current market required return is 9.5 percent what should be the share price 4 years from now? (1 Marks)

	$16.50
	$15.00
	$14.98
	$14.78
	$15.79

 

If the current market required return is 9.5 percent what would be the present share price? (1 Marks)

	$11.75
	$10.98
	$9.95
	$10.54
	$8.72