Suppose you purchase a bond and right after the purchase, the issuer (the firm) is downgraded. The YTM for that bond will most likely ____

	A.	Stay the same
	B.	Decrease
	C.	Increase

Suppose a bond is purchased at a discount and YTM does not change throughout the life of the bond. As the bond gets closer to maturity, the price of the bond _____.

	A.	decreases
	B.	stays the same
	C.	increases

Which of the following statements is FALSE?

	A.	Treasury Bills are U.S. government zero-coupon bonds with a maturity of up to one year.
	B.	Zero-coupon bond almost always sells at a discount.
	C.	Coupon bond can sell at a discount, at par, or at a premium.
	D.	Zero-Coupon Bond does not make coupon payments
	E.	Coupon bond pays only face value and no coupon at maturity.

Which of the following statements is FALSE?

	A.	When a bond issuers default probability increases, its YTM decreases.
	B.	Yield to Maturity (YTM) is set by market.
	C.	When YTM changes over time, coupon rate and coupon payments remain the same.
	D.	Coupon rate is determined by the bond issuer.

f a five-year, $1,000 bond with a 5% coupon rate is trading at a YTM of 5%, it is trading _____

	A.	cannot be determined
	B.	at par
	C.	at a premium
	D.	at a discount

You purchase a ten-year, $1000 bond for $865.79 with annual coupons is trading with a YTM of 8%. The annual coupon is $_____.

Instruction: Type ONLY your numerical answer in the unit of dollars, NO $ sign, and round to one decimal places. E.g., if your answer is $1,001.56, should type ONLY the number 1001.6, NEITHER $1001.6, $1,001.6, NOR 1002. Otherwise, Blackboard will treat it as a wrong answer.

Suppose a one-year zero-coupon bond with face value $100 is trading at $90.909. The corresponding YTM for this bond is ___%

Instruction: Type your numerical answer in the unit of percentage point, and round to two decimal places. E.g., if your answer is 0.0106465 or 1.06465%, should type ONLY the number 1.06, neither 0.0106465, 0.0106, nor 1.065%, because I already have a percentage sign at the end of the problem. Otherwise, Blackboard will treat it as a wrong answer.

A 5-year bond with a face value of $1000 has a coupon rate of 6%, with semiannual payments. What is the coupon payment for this bond per 6-month period?

	A.	$60
	B.	not enough information
	C.	$30

Which of the following statements is/are FALSE?

I YTM is the discount rate that sets the present value of the promised bond payments equal to the current market price of the bond.

II To calculate the expected return, one should discount promised payments.

III To calculate the YTM, one should discount expected payments.

IV If there is a risk of default, then the bonds expected return is greater than the YTM.

V The realized return is always equal to the YTM.

	A.	I, II
	B.	II, IV
	C.	II, III, IV, V
	D.	II, III
	E.	II, III, IV

Consider a ten-year, $1000 bond with a 6% coupon rate and annual coupons is trading with a YTM of 6%. Its bond price is $____.

Instruction: Type ONLY your numerical answer in the unit of dollars, NO $ sign, and round to one decimal places. E.g., if your answer is $1,001.56, should type ONLY the number 1001.6, NEITHER $1001.6, $1,001.6, NOR 1002. Otherwise, Blackboard will treat it as a wrong answer.