Exam 18: Corporate and Government Bonds

A 4.5 percent,semi-annual coupon bond has a face value of $1,000 and a time to maturity of 4 years.The bonds are convertible into shares of common stock at a conversion price of $42.50.The stock price currently is $40.70.Similar,non-convertible bonds have a yield to maturity of 4.5 percent.The intrinsic value of this bond is ________ and the conversion value is ________.

Which of the following features would you expect a plain vanilla bond to have? I.semi-annual coupon payments II.$1,000 face value III.stated maturity date IV.multiple bonds within one issue

Laura has an average tax rate of 22 percent and a marginal tax rate of 28 percent.What is her after-tax yield on a corporate bond which has a 6.7 percent yield?

A municipal bond is yielding 4.8 percent.Jeremy has a marginal tax rate of 24 percent.What is his equivalent taxable yield?

A STRIPS matures in 7 years,has a face value of $17,000,and has a yield to maturity of 3.5 percent.What is the price?

You own a principal STRIPS which is based on a 4.5 percent coupon Treasury bond that matures in 20 years.The STRIPS is priced at $22,868 and has a par value of $50,000.What is the yield to maturity on the STRIPS?

What is a bond called if it can be converted into shares of stock of a firm other than the bond issuer?

A Treasury bond matures in 13 years,has a 5.25 percent coupon,and a quoted price of 98:01.What is the yield to maturity?

Term bonds are defined as all bonds in a bond issue having which one of the following characteristics?

Which one of the following is the Treasury program allowing interest and principal payments from Treasury notes or bonds to be sold separately?

What is the lowest accepted competitive bid in a U.S.Treasury auction called?

You own a corporate bond which is yielding 4.9 percent.What is your after-tax yield if your marginal tax rate is 28 percent?

Municipal bonds are yielding 4.8 percent currently.Alicia has a marginal tax rate of 35 percent and Yvonne has a marginal tax rate of 22 percent.Alicia's equivalent taxable yield is ________ percent and Yvonne's is ________ percent.

Which one of the following statements related to convertible bonds is correct?

Which one of the following is a municipal bond that is secured by both the revenues from a project and also by the taxing authority of the municipality?

Which one of the following statements applies to U.S.Treasury bonds?

Which one of the following provisions grants the bondholder the option of exchanging a bond for a pre-specified number of shares of stock of the same issuer?

A convertible bond has a par value of $1,000,a market value of $875,and a conversion ratio of 14.What is the conversion price?

Bonds with relatively high coupons due to their speculative credit ratings are called which one of the following?

Which of the following statements correctly apply to TIPS? I.They are quoted as a percentage of the current accrued principal. II.They pay a variable interest rate that responds to movements in the inflation rate. III.They are backed by the full faith and credit of the U.S.government. IV.They adjust for inflation on an annual basis.