Question 1 (10 points) A bond has a $1,000 par value, 24 years to maturity, and pays a coupon of 5.25% per year, semiannually. The bond can be called in 14 years at 107% of its par value. If the bond's current yield is 5.51% per year, what is its yield to call? OA) 5.83% OB) 5.96% C) 6.08% OD) 6.15% E) 6.24% Question 2 (10 points) A bond has a $1,000 par value, seven years to maturity, and pays a coupon of 5.75% per year, annually. The bond can be called in two years at $1,075. If the bond's required return is 5.9% per year, what is its current yield? OA) 5.75% OB) 5.64% C) 5.76% OD) 5.80% E) 5.88% Question 3 (10 points) A zero-coupon bond has a $1,000 par value and 24 years to maturity. If the bond's required return is 5.25% per year, what is its value? A) $406.23 B) $352.85 OC) $292.87 D) $386.54 E) $261.88 Question 4 (10 points) A bond has a $1,000 par value, nine years to maturity, and pays a coupon of 3.75% per year, semiannually. The bond can be called in four years at $1,075. If the bond's yield to call is 3.58% per year, what is its annual yield to maturity? OA) 2.98% B) 2.72% OC) 2.84% D) 2.93% OE) 2.66% Question 5 (10 points) A bond has a $1,000 par value, 11 years to maturity, and pays a coupon of 6.75% per year, annually. The bond can be called in three years at 105% of its par value. If the bond's price is $919.98, what is its yield to call? A) 10.49% B) 10.85% OC) 11.36% D) 11.54% E) 10.22% Question 6 (10 points) A zero-coupon bond has a $1,000 par value and its price is $387.75. If its yield to maturity is 6.1% per year, in how many years does the bond mature? OA) 15 OB) 13 OC) 12 OD) 14 O E) 16 3 Question 7 (10 points) A bond has a $1,000 par value, ten years to maturity, and pays a coupon of 4.50% per year, semiannually. The bond can be called in five years at 120% of its par value. If the bond's price is $1,067.32, what is its annual yield to maturity? 9 OA) 3.43% B) 3.69% OC) 3.77% D) 3.54% E) 3.83% Question 8 (10 points) A bond pays a coupon of 6.5% per year and the bond's yield to maturity is 6.87% per year. Therefore, the bond is trading at a ____ to its par value. If the bond's yield to maturity does not change, the bond's price will be ____ next year. A) Discount, the same B) Discount, higher OC) Discount, lower D) Premium, higher E) Premium, lower A bond has a $1,000 par value, 17 years to maturity, and pays a coupon of 9.5% per year, semiannually. If the bond's yield to maturity is 10.2% per year, what is its value? O A) $922.73 B) $944.02 C) $927.48 OD) $931.84 E) $937.10 Question 10 (10 points) A bond has a $1,000 par value, 11 years to maturity, and pays a coupon of 6.75% per year, annually. You expect the bond's yield to maturity to be 6.0% per year in four years. If you plan to buy the bond today and sell it in four years, what is the most that you can pay for the bond and still earn at least a 10.0% per year return on your investment? A) $949.78 B) $963.56 OC) $1,011.36 D) $925.58 E) $1,003.89
