Exam 6: Valuing Bonds

Use the table for the question(s)below. The following table summarizes prices of various default-free zero-coupon bonds (expressed as a percentage of face value): -The yield to maturity for the two-year zero-coupon bond is closest to:

Use the information for the question(s)below. The Sisyphean Company has a bond outstanding with a face value of $1000 that reaches maturity in 15 years.The bond certificate indicates that the stated coupon rate for this bond is 8% and that the coupon payments are to be made semiannually. -Assuming the appropriate YTM on the Sisyphean bond is 9.0%,then the price at which this bond trades will be closest to:

Which of the following formulas is INCORRECT?

Use the table for the question(s)below. Consider the following zero-coupon yields on default-free securities: -The forward rate for year 3 (the forward rate quoted today for an investment that begins in two years and matures in three years)is closest to:

Which of the following statements is FALSE?

Use the following information to answer the question(s)below. Suppose you purchase a 20-year treasury bond with a 6% annual coupon ten years ago at par.Today the bond's yield to maturity has risen to 8% (EAR). -If you hold this bond to maturity,the internal rate of return you will earn on your investment will be closest to:

A 3-year default-free security with a face value of $1000 and an annual coupon rate of 6% will trade:

What is the relationship between a bond's price and its yield to maturity?

Use the following information to answer the question(s)below. -A default-free security has an annual coupon rate of 3.25% and sells for par.This bond will mature in:

Which of the following equations is INCORRECT?

Use the information for the question(s)below. Luther Industries needs to raise $25 million to fund a new office complex.The company plans on issuing ten-year bonds with a face value of $1000 and a coupon rate of 7.0% (annual payments).The following table summarizes the YTM for similar ten-year corporate bonds of various credit ratings: -Assuming that Luther's bonds receive a AAA rating,the price of the bonds will be closest to:

The price of a five-year,zero-coupon,default-free security with a face value of $1000 is closest to:

Forward interest rates:

Consider a bond that pays annually an 8% coupon with 20 years to maturity.The amount that the price of the bond will change if its yield to maturity increases from 5% to 7% is closest to:

If a bond is currently trading at its face (par)value,then it must be the case that:

What is the price today of a two-year,default-free security with a face value of $1000 and an annual coupon rate of 5.75%? Does this bond trade at a discount,premium,or at par?

Use the information for the question(s)below. The Sisyphean Company has a bond outstanding with a face value of $1000 that reaches maturity in 15 years.The bond certificate indicates that the stated coupon rate for this bond is 8% and that the coupon payments are to be made semiannually. -Assuming that this bond trades for $903,then the YTM for this bond is closest to:

Use the following information to answer the question(s)below.Consider the following four corporate bonds that have semiannual compounding: -If the YTM of these bonds decreases to 7%,which bond's price would be most sensitive to this change in YTM?

According to Figure 6.5 in the text,the percent of countries in default or restructuring debt:

Which of the following statements is FALSE?