ora this 1. Assume that the current couporwe boed y wition, we could be sure the urveis par stopimo normal Long-term interest rates are more volatile than short-term ries Intation is expected to decline in the future e. The economy is not in a reces d. Long-term bonds are a better buy than short-term bonds Maturity risk premiums help to explain the yield curve's w ards 32. What is the real rate of return on a bend with a coupe ve rate of 4962 a. 1296 b496 e. 694 d. 296 n te 33. Which of the following is the correst formula for calculating simple interest coupon a. Interest coupon - Principal (Time + Present Value) b. Interest coupon - Principal Rate of interest e. Interest coupon - Principal x Time + Rate of interest) d. Interest coupon - Principal (100 + Rate of interest) 34. Which type of risk is based on the financial integrity of a bond issuer! a. liquidity risk b. call risk c. default risk d. interest rate risk 35. Bonds are least likely to be called if a. they are selling at a substantial premium. b. they are selling at a substantial discount. c. the price is close to par value. d. if they do not mature for at least 5 years. 36. The Franklin Company issued a 6% bond three years ago at par value. The market interest rate on comparable bonds today is 5%. The Franklin Company bond currently pays a year in interest and the bond sells at a a. $60; discount b. $60; premium c. $50; discount d. $50: premium 37. The most widely used calculated measure of interest rate in bond markets is the a. coupon rate. b. discount rate. c. yield to maturity. d. current yield. CUNY Dora 22. How much would Sirowing 596 per year, be worth a 75 year b. 3.27 c. 54,077,43 d. $4,21.30 23. You deposit $1,000 today in a wavings account that pays 3.5% interes, compounded annually. How much will your account be worth at the end of 25 years? $2245.OR 152,161,24 e $2,481.41 d. $2,605,48 c. 52,735.75 24. You deposit $500 today in a savings account that pays 3.5% interest, compounded annually. How much will your account be worth at the end of 25 years? a. S1.122.54 b. $1,181.62 d. S1.302.74 25. Suppose a State of New York bond will pay $1,000 ten years from now. If the going interest rate on these 10-year bonds is 5.5%, how much is the bond worth today? a. $585.43 c. $645.44 d. $677.71 CORRES 26. Suppose a U.S. treasury bond will pay $2,500 five years from now. If the going interest rate on 5 year treasury bonds is 4.25%, how much is the bond worth today? a. $1,928.78 b. $2,030.30 c. $2,131.81 d. $2,238.40 e. $2,350.32
