Exam 7: Fixed Income Securities: Characteristics and Valuation

A Treasury bill with 182 days to maturity is quoted at 5.62 bid, 5.60 asked, and an asked yield of 5.84. How much would you pay for this security?

List the advantages and disadvantages of long-term debt financing:

Debt is usually issued with a par value of _____.

A Treasury bill with a July 11 maturity date is quoted today at 8.46 bid and 8.40 asked. How much would you pay today (January 11) for one bill?

Determine the yield-to-call (to the nearest 0.1 of a percent) of an LTV bond with a 14 percent coupon, that pays interest semiannually. The bond can be called in 7 years, has a call premium of $140, and is currently selling for $1,154.

How does a firm value an asset?

What is the value of a $1,000 par value Consul perpetual bond with a 6 percent coupon rate if the required rate of return is 9 percent?

What is the yield to maturity for a Poughkeepsie Gypsy Fortune Tellers' zero coupon bond that matures in 14 years if the bond is selling for $530?

Junk bonds are ______.

When an investor is trying to find the market value of an asset, he or she is trying to determine the ____.

All of the following types of bonds are secured EXCEPT ______.

What is the value of an MDI $2.67 perpetual preferred stock to an investor who requires a 7% annual rate of return? Assume the par value is $60.00.

The largest user of mortgage bonds is ______.

What is the yield-to-maturity of an Acme bond selling for $1,107.50 with 5 years to maturity, a 12 1/2% coupon, and semiannual compounding?

The State of Adaven issued $50 million of perpetual bonds in 1990. The bonds were issued in $100 denominations with an annual coupon interest rate of 5%. Determine the rate of return or current yield on these bonds if they are purchased at the current price of $40.

The value of a perpetual bond is equal to the annual interest payment divided by the ___________.

What is the issue price of a zero coupon bond with 15 years to maturity if it is sold to yield 7.55%?

When the market for an asset is in equilibrium, the expected rate of return on the asset is equal to the ____________.

Equipment trust certificates are used mainly by ______.

An AT&T 5½05 bond with a current yield of 6.2% must be selling ____ its face value.