were to I 1) Five years ago you took out a 30-year mortgage with an APR of 6.10% for $208,000. If you were to refinance the mortgage today for 20 years at an APR of 3.85%, how much would you save in total interest expense? A) $149,945 B) $99,963 C) $49,982 D) $199,926 2) 2) If the current inflation rate is 2.9%, then the nominal rate necessary for you to earn a(n) 6.9% real interest rate on your investment is closest to A) 14.0% B) 12.0% C) 16.0% D) 10.0% 3) 3) Consider a zero-coupon bond with $100 face value and 15 years to maturity. If the YTM is 6.1%, this bond will trade at a price closest to A) $41.14 B) $65.82 C) $49.37 D) $57.60 4) A bond has ten years to maturity, a $1000 face value, and a 5.7% coupon rate with annual coupons. What is its yield to maturity if it is currently trading at $761.21? A) 7.60% B) 9.50% C) 13.31% D) 11.40% 5) What is the yield to maturity of a five-year, 55000 bond with a 5.1% coupon rate and semiannual coupons if this bond is currently trading for a price of $4785.01? A) 7.33% B) 3.06% C) 8.56% D) 6.11% 6) What must be the price of a $10,000 bond with a 6.8% coupon rate, semiannual coupons, and eight years to maturity if it has a yield to maturity of 8% APR? A) 57440.69 B) $13,021.21 C) $11.161.03 D) 39300.86 7) 7) A $1000 bond with a coupon rate of 6.6% paid semiannually has ten years to maturity and a yield to maturity of 6.0%. If interest rates fall and the yield to maturity decreases by 0.8%, what will happen to the price of the bond? A) The price of the bond will fall by S76.16. B) The price of the bond will rise by $88.86. C) The price of the bond will fall by $63.47. D) The price of the bond will rise by $63.47. 8) A company issues a ten-year $1,000 face value bond at par with a coupon rate of 7.0% paid semiannually. The YTM at the beginning of the third year of the bond (8 years left to maturity) is 9.2% What was the percentage change in the price of the bond over the past two years? A) -14.72% B) -9.81% C) -12.27% D) -17.18% 9) A firm issues two-year bonds with a coupon rate of 6.3%, paid semiannually. The credit spread for this firm's two-year debt is 0.8%. New two-year Treasury notes are being issued at par with a coupon rate of 4.0%. What should the price of the firm's outstanding two-year bonds be per $100 of face value? A) S102.83 B) $143.96 C) $123.39 D) $82.26 10) 10) Coolibah Holdings is expected to pay dividends of $1.00 every six months for the next three years. If the current price of Coolibah stock is $2230, and Coolibah's equity cost of capital is 14% (APR), what price would you expect Coolibah's stock to sell for at the end of three years? A) $26.31 B) 528.94 C) $30.26 D) $31.57
