Question 1

Consider the following $1,000 par value zero-coupon bonds:   The expected one-year interest rate three years from now should be _________.

Accepted Answer

A)  7.00% 
B)  8.00% 
C)  9.00% 
D)  10.00% 
A)  7.00% 
B)  8.00% 
C)  9.00% 
D)  10.00%

Question 2

You hold a subordinated debenture in a firm.In the event of bankruptcy you will be paid off before which one of the following?

Accepted Answer

A)  Mortgage bonds 
B)  Senior debentures 
C)  Preferred stock 
D)  Equipment obligation bonds 
A)  Mortgage bonds 
B)  Senior debentures 
C)  Preferred stock 
D)  Equipment obligation bonds

Question 3

You buy a 10 year $1,000 par 4% annual payment coupon bond priced to yield 6%.You do not sell the bond at year end.If you are in a 15% tax bracket at year end you will owe taxes on this investment equal to _______.

Accepted Answer

A)  $9.10 
B)  $4.25 
C)  $7.68 
D)  $5.20 
A)  $9.10 
B)  $4.25 
C)  $7.68 
D)  $5.20

Question 4

On May 1, 2007, Joe Hill is considering one of the following newly-issued 10 year AAA corporate bonds.  
-If the volatility of interest rates is expected to increase,the Joe Hill should __.

Accepted Answer

A)  prefer the Wildwood bond to the Asbury bond 
B)  prefer the Asbury bond to the Wildwood bond 
C)  be indifferent between the Wildwood bond and the Asbury bond 
D)  there is not enough information given to tell 
A)  prefer the Wildwood bond to the Asbury bond 
B)  prefer the Asbury bond to the Wildwood bond 
C)  be indifferent between the Wildwood bond and the Asbury bond 
D)  there is not enough information given to tell

Question 5

A mortgage bond is _______.

Accepted Answer

A)  secured by other securities held by the firm 
B)  secured by equipment owned by the firm 
C)  secured by property owned by the firm 
D)  unsecured 
A)  secured by other securities held by the firm 
B)  secured by equipment owned by the firm 
C)  secured by property owned by the firm 
D)  unsecured

Question 6

$1,000 par value zero coupon bonds, ignore liquidity premiums  
-One year from now Bond C should sell for ________ (to the nearest dollar).

Accepted Answer

A)  $857 
B)  $842 
C)  $835 
D)  $821 
A)  $857 
B)  $842 
C)  $835 
D)  $821

Question 7

A Japanese firm issued and sold a pound denominated bond in the United Kingdom.A U.S.firm issued bonds denominated in dollars but sold the bonds in Japan.Which one of the following statements is correct?

Accepted Answer

A)  Both bonds are examples of Eurobonds. 
B)  The Japanese bond is a Eurobond and the U.S. bond is termed a foreign bond. 
C)  The U.S. bond is a Eurobond and the Japanese bond is termed a foreign bond. 
D)  Neither bond is a Eurobond. 
A)  Both bonds are examples of Eurobonds. 
B)  The Japanese bond is a Eurobond and the U.S. bond is termed a foreign bond. 
C)  The U.S. bond is a Eurobond and the Japanese bond is termed a foreign bond. 
D)  Neither bond is a Eurobond.

Question 8

A __________ bond is a bond where the issuer has an option to retire the bond before maturity at a specific price after a specific date.

Accepted Answer

A)  callable 
B)  coupon 
C)  puttable 
D)  treasury 
A)  callable 
B)  coupon 
C)  puttable 
D)  treasury

Question 9

A bond pays a semi-annual coupon and the last coupon was paid 61 days ago.If the annual coupon payment is $75,what is the accrued interest?

Accepted Answer

A)  $13.21 
B)  $12.57 
C)  $15.44 
D)  $16.32 
A)  $13.21 
B)  $12.57 
C)  $15.44 
D)  $16.32

Question 10

A convertible bond has a par value of $1,000 but its current market price is $975.The current price of the issuing company's stock is $26 and the conversion ratio is 34 shares.The bond's market conversion value is _________.

Accepted Answer

A)  $1,000 
B)  $884 
C)  $933 
D)  $980 
A)  $1,000 
B)  $884 
C)  $933 
D)  $980

Question 11

If the coupon rate on a bond is 4.50% and the bond is selling at a premium,which of the following is the most likely yield to maturity on the bond?

Accepted Answer

A)  4.30% 
B)  4.50% 
C)  5.20% 
D)  5.50% 
A)  4.30% 
B)  4.50% 
C)  5.20% 
D)  5.50%

Question 12

If the price of a $10,000 par Treasury bond is $10,237.50 the quote would be listed in the newspaper as ________.

Accepted Answer

A)  102:10 
B)  102:11 
C)  102:12 
D)  102:13 
A)  102:10 
B)  102:11 
C)  102:12 
D)  102:13

Question 13

A coupon bond which pays interest semi-annually has a par value of $1,000,matures in 8 years,and has a yield to maturity of 6%.If the coupon rate is 7%,the intrinsic value of the bond today will be __________ (to the nearest dollar).

Accepted Answer

A)  $1,000 
B)  $1,063 
C)  $1,081 
D)  $1,100 
A)  $1,000 
B)  $1,063 
C)  $1,081 
D)  $1,100

Consider the following $1,000 par value zero-coupon bonds: The expected one-year interest rate three years from now should be _________.

You hold a subordinated debenture in a firm.In the event of bankruptcy you will be paid off before which one of the following?

You buy a 10 year $1,000 par 4% annual payment coupon bond priced to yield 6%.You do not sell the bond at year end.If you are in a 15% tax bracket at year end you will owe taxes on this investment equal to _______.

On May 1, 2007, Joe Hill is considering one of the following newly-issued 10 year AAA corporate bonds. -If the volatility of interest rates is expected to increase,the Joe Hill should __.

A mortgage bond is _______.

$1,000 par value zero coupon bonds, ignore liquidity premiums -One year from now Bond C should sell for ________ (to the nearest dollar).

A Japanese firm issued and sold a pound denominated bond in the United Kingdom.A U.S.firm issued bonds denominated in dollars but sold the bonds in Japan.Which one of the following statements is correct?

A __________ bond is a bond where the issuer has an option to retire the bond before maturity at a specific price after a specific date.

A bond pays a semi-annual coupon and the last coupon was paid 61 days ago.If the annual coupon payment is $75,what is the accrued interest?

A convertible bond has a par value of $1,000 but its current market price is $975.The current price of the issuing company's stock is $26 and the conversion ratio is 34 shares.The bond's market conversion value is _________.

If the coupon rate on a bond is 4.50% and the bond is selling at a premium,which of the following is the most likely yield to maturity on the bond?

If the price of a $10,000 par Treasury bond is $10,237.50 the quote would be listed in the newspaper as ________.

A coupon bond which pays interest semi-annually has a par value of $1,000,matures in 8 years,and has a yield to maturity of 6%.If the coupon rate is 7%,the intrinsic value of the bond today will be __________ (to the nearest dollar).

Investments: Background and Issues

Asset Classes and Financial Instruments

Securities Markets

Mutual Funds and Other Investment Companies

Risk and Return: Past and Prologue

Efficient Diversification

Capital Asset Pricing and Arbitrage Pricing Theory

The Efficient Market Hypothesis

Behavioral Finance and Technical Analysis

Managing Bond Portfolios

Macroeconomic and Industry Analysis

Equity Valuation

Financial Statement Analysis

Options Markets

Option Valuation

Futures Markets and Risk Management

Portfolio Performance Evaluation

Globalization and International Investing

Hedge Funds

Taxes,inflation,and Investment Strategy

Investors and the Investment Process

Filters

Exam 10: Bond Prices and Yields

Consider the following $1,000 par value zero-coupon bonds: The expected one-year interest rate three years from now should be _________.

You hold a subordinated debenture in a firm.In the event of bankruptcy you will be paid off before which one of the following?

You buy a 10 year $1,000 par 4% annual payment coupon bond priced to yield 6%.You do not sell the bond at year end.If you are in a 15% tax bracket at year end you will owe taxes on this investment equal to _______.

On May 1, 2007, Joe Hill is considering one of the following newly-issued 10 year AAA corporate bonds. -If the volatility of interest rates is expected to increase,the Joe Hill should __.

A mortgage bond is _______.

$1,000 par value zero coupon bonds, ignore liquidity premiums -One year from now Bond C should sell for ________ (to the nearest dollar).

A Japanese firm issued and sold a pound denominated bond in the United Kingdom.A U.S.firm issued bonds denominated in dollars but sold the bonds in Japan.Which one of the following statements is correct?

A __________ bond is a bond where the issuer has an option to retire the bond before maturity at a specific price after a specific date.

A bond pays a semi-annual coupon and the last coupon was paid 61 days ago.If the annual coupon payment is $75,what is the accrued interest?

A convertible bond has a par value of $1,000 but its current market price is $975.The current price of the issuing company's stock is $26 and the conversion ratio is 34 shares.The bond's market conversion value is _________.

If the coupon rate on a bond is 4.50% and the bond is selling at a premium,which of the following is the most likely yield to maturity on the bond?

If the price of a $10,000 par Treasury bond is $10,237.50 the quote would be listed in the newspaper as ________.

A coupon bond which pays interest semi-annually has a par value of $1,000,matures in 8 years,and has a yield to maturity of 6%.If the coupon rate is 7%,the intrinsic value of the bond today will be __________ (to the nearest dollar).

Investments: Background and Issues

Asset Classes and Financial Instruments

Securities Markets

Mutual Funds and Other Investment Companies

Risk and Return: Past and Prologue

Efficient Diversification

Capital Asset Pricing and Arbitrage Pricing Theory

The Efficient Market Hypothesis

Behavioral Finance and Technical Analysis

Managing Bond Portfolios

Macroeconomic and Industry Analysis

Equity Valuation

Financial Statement Analysis

Options Markets

Option Valuation

Futures Markets and Risk Management

Portfolio Performance Evaluation

Globalization and International Investing

Hedge Funds

Taxes,inflation,and Investment Strategy

Investors and the Investment Process

Filters