Exam 6: Bonds

An investor purchases a 30-year,zero-coupon bond with a face value of $1000 and a yield to maturity of 6.5%.He sells this bond ten years later.What is the internal rate of return (IRR)on his investment,assuming yield to maturity does not change?

Use the table for the question(s) below. Consider the following yields to maturity on various one-year zero-coupon securities: - The price (expressed as a percentage of the face value)of a one-year,zero-coupon,corporate bond with a BBB rating is closest to:

Suppose that a zero-coupon bond has a face value of $10,000 and 5 years to maturity.If the YTM is 7.2%,at what price will this bond be traded?

Which of the following statements is true?

Which of the following bonds will be most sensitive to a change in interest rates?

The yields to maturity on a number of one-year,zero-coupon securities are shown in the table above.What is the price (expressed as a percentage of the face value)of a one-year,zero-coupon corporate bond with a B rating?

A bond is currently trading below par.Which of the following must be true about that bond?

Under what situation can a zero-coupon bond be selling at par to its face value?

Suppose Alex purchases a 10-year,zero-coupon bond with a yield to maturity of 7.5% and face value of $10,000.If he sold it 3 years later,what would be the rate of return of his investment,given that the yield to maturity is now 6%?

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 semi-annually. -Assuming that this bond trades for $903,then the YTM for this bond is closest to:

The yield to maturity of a 5-year,risk-free,zero-coupon bond is 4.25%.Its face value is $2,500,what is the cost of purchasing 5 of these zero-coupon bonds?

A bond indenture indicates

Suppose that when these bonds were issued,Luther received a price of $972.42 for each bond.What is the likely rating that Luther's bonds received?

Which of the following bonds is trading at a premium?

Consider a zero-coupon bond with a $1000 face value and ten years left until maturity.If the bond is currently trading for $459,then the yield to maturity on this bond is closest to:

Treasury bills have original maturities from one to ten years,while Treasury notes have original maturities of more than ten years.

Consider a zero-coupon bond with $1,000 face value and 20 years to maturity.The price at which this bond will trade if the YTM is 6% is closest to:

Prior to its maturity date,the price of a zero-coupon bond is its face value.

What must be the price of a $1000 bond with a 5.8% coupon rate,annual coupons,and 30 years to maturity if YTM is 7.5% APR?

Why is the yield of bonds with credit risk higher than that of otherwise identical default-free bonds?