QUESTION 6

What is the yield-to-maturity of a Viacom bond which is selling for $948.75 with 6 years to maturity and a 7% coupon?

	a.	8.11%
	b.	7.38%
	c.	7.01%
	d.	8.38%

8.3 points

QUESTION 7

A General Electric 725 bond closed at 98. What is the current yield?

	a.	7.81%
	b.	7.65%
	c.	7.50%
	d.	7.34%

8.3 points

QUESTION 8

Original issue deep discount bonds have decreased in popularity over the last several years due to:

	a.	increased interest in equity securities
	b.	issuance by brokerage firms of lower risk substitutes
	c.	changes in tax laws and issuance by brokerage firms of lower risk substitutes
	d.	changes in tax laws

8.3 points

QUESTION 9

By the capitalization-of-cash flows method, the value of an asset is a function of

	a.	the risk of the asset's cash flows
	b.	both the book value and the age of the asset
	c.	the age of the asset
	d.	the book value of the asset

8.3 points

QUESTION 10

What would a GMA 6% coupon bond maturing in 14 years sell (approximately) for if the current yield is 6.8633% and the yield-to-maturity is 7.48%?

	a.	$874.21
	b.	$1051.54
	c.	$920.02
	d.	$950.20

8.5 points

QUESTION 11

An AT&T 505 bond with a current yield of 6.2% must be selling ____ its face value.

	a.	above
	b.	at
	c.	below
	d.	any of the above could be correct

8.3 points

QUESTION 12

The current required rate of return on a bond issued by Who LTD is 11 percent. "Who" has a bond issue outstanding that pays interest semiannually, is selling for $845 and matures in 8 years. What is the approximate coupon rate on the outstanding bond?

	a.	6.05%
	b.	8.00%
	c.	10.68%
	d.	4.00%