Question 1

Which of the following are generally included in a bond indenture?

Accepted Answer

A) Market price and face value 
B) Repayment arrangements and market price 
C) Yield to maturity on any given date 
D) Security description and basic terms 
E) Protective covenants and lenders identities 
A) Market price and face value 
B) Repayment arrangements and market price 
C) Yield to maturity on any given date 
D) Security description and basic terms 
E) Protective covenants and lenders identities

Question 2

A zero coupon bond has a yield to maturity of 7.48 percent,semiannual compounding,a $1,000 face value,and a market quote of 41.0932.How many years is it until this bond matures?

Accepted Answer

A) 24.22 years 
B) 23.18 years 
C) 12.11 years 
D) 24.66 years 
E) 12.33 years 
A) 24.22 years 
B) 23.18 years 
C) 12.11 years 
D) 24.66 years 
E) 12.33 years

Question 3

A $5,000 face value bond has a bid quote of 99.8742 and a bid-ask spread of 0.1356.What price will you receive if you sell this bond today? Ignore any accrued interest or trading costs.

Accepted Answer

A) $998.74 
B) $1,000.10 
C) $5,009.02 
D) $4,993.71 
E) $5,010.27 
A) $998.74 
B) $1,000.10 
C) $5,009.02 
D) $4,993.71 
E) $5,010.27

Question 4

A $1,000 face value bond has a bid quote of 100.6794 and a bid-ask spread of 0.0155.If you were to purchase this bond,what clean price would you pay?

Accepted Answer

A) $1,011.23 
B) $1,004.33 
C) $1,009.18 
D) $1,006.95 
E) $1,008.56 
A) $1,011.23 
B) $1,004.33 
C) $1,009.18 
D) $1,006.95 
E) $1,008.56

Question 5

______bonds pay interest that is taxed only at the federal level.

Accepted Answer

A) Municipal 
B) Corporate 
C) Treasury 
D) Mortgage 
E) Zero coupon 
A) Municipal 
B) Corporate 
C) Treasury 
D) Mortgage 
E) Zero coupon

Question 6

You require a 3.2 percent real rate of return.If the inflation rate is 3.6 percent,what nominal rate must you earn?

Accepted Answer

A) 6.80% 
B) 6.92% 
C) 6.85% 
D) 6.88% 
E) 6.95% 
A) 6.80% 
B) 6.92% 
C) 6.85% 
D) 6.88% 
E) 6.95%

Question 7

The written,legally binding agreement between a corporate borrower and its lenders detailing all of the terms of a bond issue is called the

Accepted Answer

A) indenture. 
B) covenant. 
C) terms of trade. 
D) put provision. 
E) call provision. 
A) indenture. 
B) covenant. 
C) terms of trade. 
D) put provision. 
E) call provision.

Question 8

A bond currently sells for $924.58,matures in 11 years,pays $27.50 every 6 months in interest,and has a face value of $1,000.What is the yield to maturity?

Accepted Answer

A) 6.47% 
B) 5.98% 
C) 5.01% 
D) 3.23% 
E) 4.07% 
A) 6.47% 
B) 5.98% 
C) 5.01% 
D) 3.23% 
E) 4.07%

Question 9

A Treasury bond is quoted at a price of 99.4062 with a current yield of 3.17 percent.What is the coupon rate?

Accepted Answer

A) 3.315% 
B) 3.068% 
C) 3.151% 
D) 3.077% 
E) 3.102% 
A) 3.315% 
B) 3.068% 
C) 3.151% 
D) 3.077% 
E) 3.102%

Question 10

A $1,000 face value bond matures in 16 years,pays interest semiannually,and has a market quote of 102.0562.The coupon rate is 5.5 percent,the current yield is ________ percent,and the yield to maturity is ________ percent.

Accepted Answer

A) 5.39; 5.31 
B) 5.61; 5.74 
C) 5.42; 5.28 
D) 5.78; 5.84 
E) 5.44; 5.61 
A) 5.39; 5.31 
B) 5.61; 5.74 
C) 5.42; 5.28 
D) 5.78; 5.84 
E) 5.44; 5.61

Question 11

A General Co.bond has a coupon rate of 6 percent and pays interest annually.The face value is $1,000,and the current market price is $1,006.49.The bond matures in 16 years.What is the yield to maturity?

Accepted Answer

A) 6.08% 
B) 5.94% 
C) 6.11% 
D) 6.03% 
E) 5.97% 
A) 6.08% 
B) 5.94% 
C) 6.11% 
D) 6.03% 
E) 5.97%

Which of the following are generally included in a bond indenture?

A zero coupon bond has a yield to maturity of 7.48 percent,semiannual compounding,a $1,000 face value,and a market quote of 41.0932.How many years is it until this bond matures?

A $5,000 face value bond has a bid quote of 99.8742 and a bid-ask spread of 0.1356.What price will you receive if you sell this bond today? Ignore any accrued interest or trading costs.

A $1,000 face value bond has a bid quote of 100.6794 and a bid-ask spread of 0.0155.If you were to purchase this bond,what clean price would you pay?

______bonds pay interest that is taxed only at the federal level.

You require a 3.2 percent real rate of return.If the inflation rate is 3.6 percent,what nominal rate must you earn?

The written,legally binding agreement between a corporate borrower and its lenders detailing all of the terms of a bond issue is called the

A bond currently sells for $924.58,matures in 11 years,pays $27.50 every 6 months in interest,and has a face value of $1,000.What is the yield to maturity?

A Treasury bond is quoted at a price of 99.4062 with a current yield of 3.17 percent.What is the coupon rate?

A $1,000 face value bond matures in 16 years,pays interest semiannually,and has a market quote of 102.0562.The coupon rate is 5.5 percent,the current yield is percent,and the yield to maturity is percent.

A General Co.bond has a coupon rate of 6 percent and pays interest annually.The face value is $1,000,and the current market price is $1,006.49.The bond matures in 16 years.What is the yield to maturity?

Introduction to Corporate Finance

Financial Statements and Cash Flow

Financial Statements Analysis and Financial Models

Discounted Cash Flow Valuation

Stock Valuation

Net Present Value and Other Investment Rules

Making Capital Investment Decisions

Risk Analysis, Real Options, and Capital Budgeting

Risk and Return: Lessons From Market History

Return and Risk: The Capital Asset Pricing Model Capm

Risk, Cost of Capital, and Valuation

Efficient Capital Markets and Behavioral Challenges

Capital Structure: Basic Concepts

Capital Structure: Limits to the Use of Debt

Dividends and Other Payouts

Options and Corporate Finance

Short-Term Finance and Planning

Raising Capital

International Corporate Finance

Mergers and Acquisitions Web Only

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Exam 5: Interest Rates and Bond Valuation

Which of the following are generally included in a bond indenture?

A zero coupon bond has a yield to maturity of 7.48 percent,semiannual compounding,a $1,000 face value,and a market quote of 41.0932.How many years is it until this bond matures?

A $5,000 face value bond has a bid quote of 99.8742 and a bid-ask spread of 0.1356.What price will you receive if you sell this bond today? Ignore any accrued interest or trading costs.

A $1,000 face value bond has a bid quote of 100.6794 and a bid-ask spread of 0.0155.If you were to purchase this bond,what clean price would you pay?

______bonds pay interest that is taxed only at the federal level.

You require a 3.2 percent real rate of return.If the inflation rate is 3.6 percent,what nominal rate must you earn?

The written,legally binding agreement between a corporate borrower and its lenders detailing all of the terms of a bond issue is called the

A bond currently sells for $924.58,matures in 11 years,pays $27.50 every 6 months in interest,and has a face value of $1,000.What is the yield to maturity?

A Treasury bond is quoted at a price of 99.4062 with a current yield of 3.17 percent.What is the coupon rate?

A $1,000 face value bond matures in 16 years,pays interest semiannually,and has a market quote of 102.0562.The coupon rate is 5.5 percent,the current yield is ________ percent,and the yield to maturity is ________ percent.

A General Co.bond has a coupon rate of 6 percent and pays interest annually.The face value is $1,000,and the current market price is $1,006.49.The bond matures in 16 years.What is the yield to maturity?

Introduction to Corporate Finance

Financial Statements and Cash Flow

Financial Statements Analysis and Financial Models

Discounted Cash Flow Valuation

Stock Valuation

Net Present Value and Other Investment Rules

Making Capital Investment Decisions

Risk Analysis, Real Options, and Capital Budgeting

Risk and Return: Lessons From Market History

Return and Risk: The Capital Asset Pricing Model Capm

Risk, Cost of Capital, and Valuation

Efficient Capital Markets and Behavioral Challenges

Capital Structure: Basic Concepts

Capital Structure: Limits to the Use of Debt

Dividends and Other Payouts

Options and Corporate Finance

Short-Term Finance and Planning

Raising Capital

International Corporate Finance

Mergers and Acquisitions Web Only

Filters

A $1,000 face value bond matures in 16 years,pays interest semiannually,and has a market quote of 102.0562.The coupon rate is 5.5 percent,the current yield is percent,and the yield to maturity is percent.