QUESTION 3

If yields remain constant, which of the following bonds will have a capital gain over the year?

Bond	Coupon Rate	YTM	Time to maturity
A	4%	5%	5 years
B	5%	5%	5 years

QUESTION 6

A bond that has a yield of 8% and a coupon rate of 7%, should have a _______________ price than a bond that has a yield of 7% and a coupon rate of 8%.

	A.	higher
	B.	lower
	C.	equal

QUESTION 4

The coupon rate on a bond is ______________.

	A.	the bonds annual interest payment divided by the bonds price
	B.	equal to the markets required return on the bond when the bond is selling at par value
	C.	the same as the yield to maturity before the maturity date
	D.	greater than the yield to maturity when the bond sells at a discount

QUESTION 5 Which of the following bonds is more likely to be called?

Callable Bond	Coupon Rate	YTM	Call Price	Time to call
A	5%	4%	$1000	2 years
B	4%	5%	$1005	2 years