Question 30

Neverwho Co. has 7 percent bonds on the market with eight years left to maturity. The bonds make annual payments and sell for $902.25. On these bonds, what is the yield to maturity?

7.22%

7.00%

8.75%

7.76%

6.32%

Question 31

When pricing bonds, if a bond's coupon rate is more than the required rate of return, then:

The bond sells at a larger premium if it has a long maturity and at a smaller premium if it has a short maturity.

The holder of the bond will realize a capital loss if the bond is held to maturity.

The bond sells at par because the required rate of return is adjusted to reflect the discrepancy.

The bond sells at a premium if it has a long maturity and at a discount if it has a short maturity.

The holder of the bond is assured of a profit regardless of when the bond is eventually sold.

Question 32

J&J Manufacturing just issued a bond with a $1,000 face value and a coupon rate of 8%. If the bond has a life of 20 years, pays annual coupons, and the yield to maturity is 7.5%, what is the total present value of the bond's maturity or face

value?

$235.41

$341.15

$1,050.97

$1,000.00

$815.56

Question 33

Joe Kernan Co. has bonds on the market with 10 years to maturity; they have an annualized YTM of 8.5%, and a current price of $1,090. The bonds make semi-annual payments (two payments per year). What must be the coupon rate on these bonds?

9.1%.

8.8%.

4.9%.

9.9%.

4.8%.