Multiple choice

1. A bond pays 9% yearly interest in semi-annual payments for 6 years. The current yield on similar bonds is 12%. To determine the market value of this bond, you must:

A. find the interest factors (IFs) for 12 periods at 12%.

B. find the interest factors (IFs) for 6 periods at 9%.

C. find the interest factors (IFs) for 12 periods at 6%.

D. find the interest factors (IFs) for 6 periods at 6%.

2. A 15-year bond pays 11% on a face value of $1,000. If similar bonds are currently yielding 8%, 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 to tell

3. A 10-year bond pays 8% on a face value of $1,000. If similar bonds are currently yielding 10%, what is the market value of the bond? Use annual analysis.

A. Less than $900

B. More than $900 and less than $1100

C. More than $1100

D. not enough information to tell

Customer: replied 1 year ago.

4. A ten-year bond pays 11% interest on a $1000 face value annually. If it currently sells for $1,195, what is its approximate yield to maturity?

A. 9.33%

B. 7.94%

C. 12.66%

D. 8.10%