Question 1

A 7% coupon bond with an ask price of $100.00 pays interest every 182 days. If the bond paid interest 32 days ago, the invoice price of the bond would be

Accepted Answer

A)  $1,005.67. 
B)  $1,007.35. 
C)  $1,006.35. 
D)  $1,006.15. 
E)  $1,007.12. 
A)  $1,005.67. 
B)  $1,007.35. 
C)  $1,006.35. 
D)  $1,006.15. 
E)  $1,007.12.

Question 2

A bond has a par value of $1,000, a time to maturity of 20 years, a coupon rate of 10% with interest paid annually, a current price of $850, and a yield to maturity of 12%. Intuitively and without using calculations, if interest payments are reinvested at 10%, the realized compound yield on this bond must be

Accepted Answer

A)  10.00%. 
B)  10.9%. 
C)  12.0%. 
D)  12.4%. 
E)  None of the options are correct. 
A)  10.00%. 
B)  10.9%. 
C)  12.0%. 
D)  12.4%. 
E)  None of the options are correct.

Question 3

The compensation from a CDS can come from

Accepted Answer

A)  the CDS holder delivering the defaulted bond to the CDS issuer in return for the bond's par value. 
B)  the CDS issuer paying the swap holder the difference between the par value of the bond and the bond's market price. 
C)  the federal government paying off on the insurance claim. 
D)  the CDS holder delivering the defaulted bond to the CDS issuer in return for the bond's par value, and the CDS issuer paying the swap holder the difference between the par value of the bond and the bond's market price. 
E)  None of the options are correct. 
A)  the CDS holder delivering the defaulted bond to the CDS issuer in return for the bond's par value. 
B)  the CDS issuer paying the swap holder the difference between the par value of the bond and the bond's market price. 
C)  the federal government paying off on the insurance claim. 
D)  the CDS holder delivering the defaulted bond to the CDS issuer in return for the bond's par value, and the CDS issuer paying the swap holder the difference between the par value of the bond and the bond's market price. 
E)  None of the options are correct.

Question 4

Bond analysts might be more interested in a bond's yield to call if

Accepted Answer

A)  the bond's yield to maturity is insufficient. 
B)  the firm has called some of its bonds in the past. 
C)  the investor only plans to hold the bond until its first call date. 
D)  interest rates are expected to rise. 
E)  interest rates are expected to fall. 
A)  the bond's yield to maturity is insufficient. 
B)  the firm has called some of its bonds in the past. 
C)  the investor only plans to hold the bond until its first call date. 
D)  interest rates are expected to rise. 
E)  interest rates are expected to fall.

Question 5

The _________ gives the number of shares for which each convertible bond can be exchanged.

Accepted Answer

A)  conversion ratio 
B)  current ratio 
C)  P/E ratio 
D)  conversion premium 
E)  convertible floor 
A)  conversion ratio 
B)  current ratio 
C)  P/E ratio 
D)  conversion premium 
E)  convertible floor

Question 6

A bond with a 12% coupon, 10 years to maturity, and selling at $88.00 has a yield to maturity of

Accepted Answer

A)  over 14%. 
B)  between 13% and 14%. 
C)  between 12% and 13%. 
D)  between 10% and 12%. 
E)  less than 12%. 
A)  over 14%. 
B)  between 13% and 14%. 
C)  between 12% and 13%. 
D)  between 10% and 12%. 
E)  less than 12%.

Question 7

A coupon bond pays annual interest, has a par value of $1,000, matures in 12 years, has a coupon rate of 11%, and has a yield to maturity of 12%. The current yield on this bond is

Accepted Answer

A)  10.39%. 
B)  10.43%. 
C)  10.58%. 
D)  11.73%. 
E)  None of the options are correct. 
A)  10.39%. 
B)  10.43%. 
C)  10.58%. 
D)  11.73%. 
E)  None of the options are correct.

Question 8

Consider the following $1,000-par-value zero-coupon bonds: $\begin{array}{ccc}
\text { Bond } & \text { Years of } & \text { Price }\
&\text { Maturity }\
\text { A } & 1 & \$ 909.09 \
\text { B } & 2 & 811.62 \
\text { C } & 3 & 711.78 \
\text { D}& 4 & 635.52
\end{array}$
 The yield to maturity on bond A is

Accepted Answer

A)  10%. 
B)  11%. 
C)  12%. 
D)  14%. 
E)  None of the options are correct. 
A)  10%. 
B)  11%. 
C)  12%. 
D)  14%. 
E)  None of the options are correct.

A 7% coupon bond with an ask price of $100.00 pays interest every 182 days. If the bond paid interest 32 days ago, the invoice price of the bond would be

The compensation from a CDS can come from

Bond analysts might be more interested in a bond's yield to call if

The _________ gives the number of shares for which each convertible bond can be exchanged.

A bond with a 12% coupon, 10 years to maturity, and selling at $88.00 has a yield to maturity of

A coupon bond pays annual interest, has a par value of $1,000, matures in 12 years, has a coupon rate of 11%, and has a yield to maturity of 12%. The current yield on this bond is

Consider the following $1,000-par-value zero-coupon bonds: Bond Years of Price Maturity A 1 \ 909.09 B 2 811.62 C 3 711.78 D 4 635.52 The yield to maturity on bond A is

The Investment Environment

Asset Classes and Financial Instruments

How Securities Are Traded

Mutual Funds and Other Investment Companies

Risk, Return, and the Historical Record

Capital Allocation to Risky Assets

Efficient Diversification

Index Models

The Capital Asset Pricing Model

Arbitrage Pricing Theory and Multifactor Models of Risk and Return

The Efficient Market Hypothesis

Behavioral Finance and Technical Analysis

Empirical Evidence on Security Returns

The Term Structure of Interest Rates

Managing Bond Portfolios

Macroeconomic and Industry Analysis

Equity Valuation Models

Financial Statement Analysis

Options Markets: Introduction

Option Valuation

Futures Markets

Futures, Swaps, and Risk Management

Portfolio Performance Evaluation

International Diversification

Hedge Funds

The Theory of Active Portfolio Management

Investment Policy and the Framework of the Cfa Institute

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Exam 14: Bond Prices and Yields

A 7% coupon bond with an ask price of $100.00 pays interest every 182 days. If the bond paid interest 32 days ago, the invoice price of the bond would be

The compensation from a CDS can come from

Bond analysts might be more interested in a bond's yield to call if

The _________ gives the number of shares for which each convertible bond can be exchanged.

A bond with a 12% coupon, 10 years to maturity, and selling at $88.00 has a yield to maturity of

A coupon bond pays annual interest, has a par value of $1,000, matures in 12 years, has a coupon rate of 11%, and has a yield to maturity of 12%. The current yield on this bond is

Consider the following $1,000-par-value zero-coupon bonds: Bond Years of Price Maturity A 1 \ 909.09 B 2 811.62 C 3 711.78 D 4 635.52 The yield to maturity on bond A is

The Investment Environment

Asset Classes and Financial Instruments

How Securities Are Traded

Mutual Funds and Other Investment Companies

Risk, Return, and the Historical Record

Capital Allocation to Risky Assets

Efficient Diversification

Index Models

The Capital Asset Pricing Model

Arbitrage Pricing Theory and Multifactor Models of Risk and Return

The Efficient Market Hypothesis

Behavioral Finance and Technical Analysis

Empirical Evidence on Security Returns

The Term Structure of Interest Rates

Managing Bond Portfolios

Macroeconomic and Industry Analysis

Equity Valuation Models

Financial Statement Analysis

Options Markets: Introduction

Option Valuation

Futures Markets

Futures, Swaps, and Risk Management

Portfolio Performance Evaluation

International Diversification

Hedge Funds

The Theory of Active Portfolio Management

Investment Policy and the Framework of the Cfa Institute

Filters