Exam 14: Bond Prices and Yields

A Treasury bond due in one year has a yield of 5.7%; a Treasury bond due in 5 years has a yield of 6.2%.A bond issued by Ford Motor Company due in 5 years has a yield of 7.5%; a bond issued by Shell Oil due in one year has a yield of 6.5%.The default risk premiums on the bonds issued by Shell and Ford, respectively, are

Consider a 5-year bond with a 10% coupon that has a present yield to maturity of 8%.If interest rates remain constant, one year from now the price of this bond will be

A coupon bond that pays interest of $40 semi-annually has a par value of $1,000, matures in four years, and is selling today at a $36 discount from par value.The yield to maturity on this bond is

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

A firm with a low rating from the bond rating agencies would have

Floating-rate bonds are designed to ___________ while convertible bonds are designed to __________.

A CDO is a

What is the relationship between the price of a straight bond and the price of a callable bond

A coupon bond is reported as having an ask price of 113% of the $1,000 par value in the Wall Street Journal.If the last interest payment was made two months ago and the coupon rate is 12%, the invoice price of the bond will be

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

Collateralized bonds

Which one of the following statements about convertibles is true

Debt securities are often called fixed-income securities because

A coupon bond that pays interest annually has a par value of $1,000, matures in eight years, and has a yield to maturity of 9%.The intrinsic value of the bond today will be ______ if the coupon rate is 6%.

The bond indenture includes

A Treasury bill with a par value of $100,000 due two months from now is selling today for $98,039, with an effective annual yield of

The yield to maturity on a bond is

The compensation from a CDS can come from

Consider the following $1,000 par value zero-coupon bonds: The yield to maturity on bond B is

A 10% coupon, annual payments, bond maturing in 10 years, is expected to make all coupon payments, but to pay only 50% of par value at maturity.What is the expected yield on this bond if the bond is purchased for $975