The principal amount repaid at the maturity of a bond is called its

Select one:

a.real interest rate.

b.face value.

c.credit risk premium

d.coupon repayment.

e.maturity value.

We are given the following information on a bond issue:

Terms

Amount of issue

$150 million

Issue date

3/1/2020

Maturity date

3/1/2043

Face value

$1,000

Annual coupon

5.25%

Yield to maturity

5.00%

Coupon payment

Semi-annual; 3/1 and 9/1

Security

Unsecured

What is the price on this bond?

Select one:

a.$1,133.72

b.$1,033.94

c.$1,000.00

d.$997.47

e.$903.51

Which of the following conditions will increase the interest rate risk on a bond?

I.shorter time to maturity

II.longer time to maturity

III.lower coupon rate

IV.higher coupon rate

Select one:

a.I and III

b.I and IV

c.II and III

d.II and IV

e.none of the above

XYZ Co. is planning to issue stripped bonds with a face value of $100 and maturity of 10 years. What is the price of each stripped bond if the yield to maturity on similar bonds is 5.5% compounded semi-annually?

Select one:

a.$58.13

b.$58.54

c.$76.24

d.$94.72

e.$100.00

Today is December 1, 2019. A bond with a coupon rate of 7.6% has an invoice price of $1,088. The issue date on the bond is May 1, 2018, and the maturity date on the bond is May 1, 2028. The bond makes semi-annual coupon payments on May 1 and November1. What is the clean price on this bond?

Select one:

a.$1,036.50

b.$1,043.33

c.$1,070.67

d.$1,081.67

e.$1,094.33

The form of corporate restructuring in which a small group of investors raises loan financing to purchase all the equity shares of a public company is called

Select one:

a.a privatization.

b.a leveraged buyout.

c.an indenture.

d.a debenture.

e.a reorganization.

When interest rates ________, the prices of currently outstanding par-bonds ___________.

Select one:

a.rise; fall, because they are now trading at a premium

b.rise; rise, because they are now trading at a premium

c.fall; rise, because they are now trading at a discount

d.fall; remain unchanged, because their yields are fixed

e.fall; rise, because they are now trading at a premium

A firm has a bond issue with face value of $1,000, a 7% coupon rate, and nine years to maturity. The bond makes coupon payments every six months and is currently priced at $1,067.89. What is the yield to maturity on this bond?

Select one:

a.5.67%

b.6.01%

c.7.07%

d.7.49%

e.14.99%

What is the duration of a five-year bond with a coupon rate of 7%, a yield to maturity of 8%, a semi-annual coupon payment, and a face value of $1,000?

Select one:

a.3.80 years

b.4.20 years

c.4.25 years

d.4.29 years

e.8.51 years

The yield on a 10-year bond is 7%. The 30-day T-bill yield is 2.5%, while the inflation rate is estimated to be 2.3%. What is the real rate of return on the bond based on the exact Fisher Effect formula?

Select one:

a.3.00%

b.3.90%

c.4.00%

d.4.59%

e.9.16%