Multiple choice

Question 1 

A bond that has a yield to maturity greater than its coupon interest rate will sell for a price:

A. below par.

B. at par.

C. above par.

D. that is equal to the face value of the bond plus the value of all interest payments.

 Question 2 

Which of the following is not one of the components that makes up the required rate of return on a bond?

A. Risk premium

B. Real rate of return

C. Inflation premium

D. Maturity payment

 Question 3 

A 20-year bond pays 12% on a face value of $1,000. If similar bonds are currently yielding 9%, What is the market value of the bond? Use annual analysis.

A. over $1,000

B. under $1,000

C. over $1,200

D. Not enough information given to tell

Question 4 

A ten-year bond, with par value equals $1000, pays 10% annually. If similar bonds are currently yielding 6% annually, what is the market value of the bond? Use semi-annual analysis.

A. $1,000

B. $1127.50

C. $1297.85

D. $2549.85