Question 1) Knight, Inc., has issued a three-year bond that pays a coupon rate of 7.10 percent. Coupon payments are made semiannually. Given the market rate of interest of 4.93 percent, what is the market value of the bond? What is the market value?

Question 2) Regatta Inc. has seven-year bonds outstanding that pay a 12.99 percent coupon rate. Investors buying these bonds today can expect to earn a yield to maturity of 10.41 percent. What is the current value of these bonds? Assume annual coupon payments. What is the current value?

Question 3) Diane Carter is interested in buying a five-year zero coupon bond with a face value of $1,000. She understands that the market interest rate for similar investments is 9.21 percent. Assume annual coupon payments.What is the current value of this bond? What is the current value of the bond?

Question 4) Ten-year zero coupon bonds issued by the U.S. Treasury have a face value of $1,000 and interest is compounded semiannually. If similar bonds in the market yield 8.11 percent, what is the value of these bonds? What is the value of the bond?

Question 5) Pullman Corp issued 10-year bonds four years ago with a coupon rate of 8.38 percent. At the time of issue, the bonds sold at par. Today bonds of similar risk and maturity must pay an annual coupon of 7.99 percent to sell at par value. Assuming semiannual coupon payments, what will be the current market price of the firms bonds? What is the current market price?

Question 6) 7 years ago Eastern Corporation issued 20-year bonds that had a $1,100 face value, paid interest annually, and had a coupon rate of 7 percent. If the market rate of interest is 5.5 percent today, what is the current market price of an Eastern Corporation bond? What is the current market price?

Question 7) Which one of the following statements is NOT true?

A) Interest rate changes and bond prices are inversely related.

B) Interest rate risk is the risk that bond prices will change as interest rates change.

C) As interest rates increase, bond prices increase.

D) Long-term bonds are more price volatile than short-term bonds of similar risk.

Question 8) Rudy Sandberg wants to invest in four-year bonds that are currently priced at $884.87. These bonds have a coupon rate of 5.3 percent and make semiannual coupon payments. What is the current market yield on this bond?