Exam 14: Bond Prices and Yields

A convertible bond has a par value of $1,000 and a current market value of $950.The current price of the issuing firm's stock is $22 and the conversion ratio is 40 shares.The bond's conversion premium is _________.

At issue,coupon bonds typically sell ________.

A Treasury bond due in one year has a yield of 6.2%; a Treasury bond due in 5 years has a yield of 6.7%.A bond issued by Xerox due in 5 years has a yield of 7.9%; a bond issued by Exxon due in one year has a yield of 7.2%.The default risk premiums on the bonds issued by Exxon and Xerox,respectively,are

Which one of the following statements about convertibles is false?

Discuss the taxation ramifications of zero coupon bonds.How has this taxation procedure changed over the years? How has this change affected the demand for these bonds?

A coupon bond that pays interest annually has a par value of $1,000,matures in 8 years,and has a yield to maturity of 9%.The intrinsic value of the bond today will be ______ if the coupon rate is 6%.

A coupon bond that pays interest semi-annually has a par value of $1,000,matures in 5 years,and has a yield to maturity of 10%.The intrinsic value of the bond today will be ________ if the coupon rate is 12%.

The process of retiring high-coupon debt and issuing new bonds at a lower coupon to reduce interest payments is called

A zero-coupon bond has a yield to maturity of 9% and a par value of $1,000.If the bond matures in 8 years,the bond should sell for a price of _______ today.

The compensation form a CDS can come from

Which one of the following statements about convertibles is true?

A Treasury bond due in one year has a yield of 4.3%; a Treasury bond due in 5 years has a yield of 5.06%.A bond issued by Boeing due in 5 years has a yield of 7.63%; a bond issued by Caterpillar due in one year has a yield of 7.16%.The default risk premiums on the bonds issued by Boeing and Caterpillar,respectively,are

If a 7% coupon bond is trading for $975.00,it has a current yield of ____________ percent.

If a 7.5% coupon bond that pays interest every 182 days paid interest 62 days ago,the accrued interest would be

A 10% coupon bond,annual payments,10 years to maturity is callable in 3 years at a call price of $1,100.If the bond is selling today for $975,the yield to call is _________.

You have just purchased a 7-year zero-coupon bond with a yield to maturity of 11% and a par value of $1,000.What would your rate of return at the end of the year be if you sell the bond? Assume the yield to maturity on the bond is 9% at the time you sell.

If a 7.5% coupon bond is trading for $1050.00,it has a current yield of ____________ percent.

If an 8% coupon bond is trading for $1025.00,it has a current yield of ____________ percent.

Why are many bonds callable? What is the disadvantage to the investor of a callable bond? What does the investor receive in exchange for a bond being callable? How are bond valuation calculations affected if bonds are callable?

A 7.5% coupon bond with an ask price of 100: 00 pays interest every 182 days.If the bond paid interest 62 days ago,the invoice price of the bond would be