Finance Assignment

Question 1
The rate required in the market on a bond is called the:


yield to maturity

risk premium
current yield
call yield
liquidity premium




1 points 
Question 2
ABC has issued a bond with the following characteristics:
Par: $1,000; Time to maturity: 12 years; Coupon rate: 9%; 
Assume semi-annual coupon payments. Calculate the price of this bond if the YTM is 7.11%
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.






1 points 
Question 3
The 11.82 percent, $1,000 face value bonds of Tim McKnight, Inc., are currently selling at $930.02. What is the current yield?
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.






1 points 
Question 4
ABC's bonds have a 9.5 percent coupon and pay interest semi-annually. Currently, the bonds are quoted at 106.315 percent of par value. The bonds mature in 8 years. What is the yield to maturity?






1 points 
Question 5
Stealers Wheel Software has 5.97% coupon bonds on the market with nine years to maturity. The bonds make semi-annual payments and currently sell for 95.23% of par. What is the current yield?
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.






1 points 
Question 6
ABC Inc., has $1,000 face value bonds outstanding. These bonds mature in 3 years, and have a 6.5 percent coupon. The current price is quoted at 98.59 percent of par value. Assume semi-annual payments. What is the yield to maturity?
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.






1 points 
Question 7
Assume that you wish to purchase a 18-year bond that has a maturity value of $1,000 and a coupon interest rate of 5%, paid semiannually. If you require a 4.42% rate of return on this investment (YTM), what is the maximum price that you should be willing to pay for this bond? That is, solve for PV.
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.






1 points 
Question 8
The principal amount of a bond that is repaid at the end of term is called the par value or the:


coupon rate
back-end amount
coupon
discount amount
face value




1 points 
Question 9
A discount bond has a yield to maturity that:


exceeds the coupon rate. 

equals zero. 

is equal to the current yield. 

is less than the coupon rate. 

equals the bond's coupon rate. 





1 points 
Question 10
A firm's bonds have maturity of 10 years with a $1000 face value, an 8% semi-annual coupon, are callable in 5 years, at $1,050, and currently sells at a price of $1,100. What is the yield to call (YTC)?
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.






1 points 
Question 11
ABC Corp. issued 15-year bonds 2 years ago at a coupon rate of 10.6%. The bonds make semi-annual payments. If these bonds currently sell for 97% of par value, what is the YTM?
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.






1 points 
Question 12
The yield to maturity on a Marshall Co. premium bond is 7.6 percent. This is the:


nominal rate. 

effective rate. 

real rate. 

current yield. 

coupon rate. 





1 points 
Question 13
ABC's Inc.'s bonds currently sell for $1,280 and have a par value of $1,000. They pay a $135 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,050. What is their yield to call (YTC)?
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.






1 points 
Question 14
ABC has issued a bond with the following characteristics:
Par: $1,000; Time to maturity: 17 years; Coupon rate: 5%; 
Assume annual coupon payments. Calculate the price of this bond if the YTM is 11.94%
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.






1 points 
Question 15
A bond which sells for less than the face value is called a:


perpetuity. 

debenture. 

discount bond. 

premium bond. 

par value bond. 





1 points 
Question 16
BCD’s $1,000 par value bonds currently sell for $798.40. The coupon rate is 10%, paid semi-annually. If the bonds have 5 years to maturity, what is the yield to maturity? 
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.






1 points 
Question 17
ABC has issued a bond with the following characteristics:
Par: $1,000; Time to maturity: 17 years; Coupon rate: 5%; 
Assume semi-annual coupon payments. Calculate the price of this bond if the YTM is 11.78%
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.






1 points 
Question 18
You paid $908 for a corporate bond that has a 11.77% coupon rate. What is the current yield?
Hint: if nothing is mentioned, then assume par value = $1,000
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.






1 points 
Question 19
The 8 percent coupon bonds of the Peterson Co. are selling for 98 percent of par value. The bonds mature in 5 years and pay interest semi-annually. These bonds have a yield to maturity of _____ percent.






1 points 
Question 20
ABC wants to issue 20-year, zero coupon bonds that yield 9.39 percent. What price should they charge for these bonds if they have a par value of $1,000? That is, solve for PV. Assume annual compounding.
Hint: zero coupon bonds means PMT = 0
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.






1 points 
Question 21
The 11.51 percent coupon bonds of the Peterson Co. are selling for $815.99. The bonds mature in 5 years and pay interest semi-annually. These bonds have current yield of _____ percent.
Enter your answer in percentages rounded off to two decimal points.






1 points 
Question 22
A premium bond is a bond that:


has a par value which exceeds the face value. 

has a market price which exceeds the face value. 

is selling for less than par value. 

has a face value in excess of $1,000. 

is callable within 12 months or less.