Exam 6: Valuing Bonds

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

Use the following information to answer the question(s)below. Consider the following four corporate bonds that have semiannual compounding: -Which of these bonds sells at a discount?

Use the table for the question(s)below. The following table summarizes prices of various default-free zero-coupon bonds (expressed as a percentage of face value): -Compute the yield to maturity for each of the five zero-coupon bonds.

What is the price today of a two-year,default-free security with a face value of $1000 and an annual coupon rate of 5.75%? Does this bond trade at a discount,premium,or at par?

The credit spread of the B corporate bond is closest to:

Which of the following statements is TRUE?

Use the table for the question(s)below. The following table summarizes prices of various default-free zero-coupon bonds (expressed as a percentage of face value): -The yield to maturity for the two year zero-coupon bond is closest to:

The price (expressed as a percentage of the face value)of a one-year,zero-coupon corporate bond with a AAA rating is closest to:

If the YTM of these bonds increased to 9%,which bond's price would be most sensitive to this change in YTM?

The price of a five-year,zero-coupon,default-free security with a face value of $1000 is closest to:

Assuming that this bond trades for $1035.44,then the YTM for this bond is equal to:

The likely effect of a country printing additional currency to pay its debts is:

What rating must Luther receive on these bonds if they want the bonds to be issued at par?

The forward rate for year 5 (the forward rate quoted today for an investment that begins in four years and matures in five years)is closest to:

The forward rate for year 3 (the forward rate quoted today for an investment that begins in two years and matures in three years)is closest to:

Which of the following statements is FALSE?

Taggart Transcontinental has issued at par a zero-coupon bond with a ten-year maturity.Investors believe there is a 10% chance that Taggart Transcontinental will default on these bonds.If they do default,investors expect to receive only 50 cents per dollar they are owed.If investors require an 8% return on their investment in these bonds,then the yield to maturity on these bonds will be closest to (assume annual compounding):

Consider a five-year,default-free bond with an annual coupon rate of 5% and a face value of $1000.The YTM on this bond is closest to:

Which of the following statements is FALSE?

Consider a zero-coupon bond with a $1000 face value and 10 years left until maturity.If the YTM of this bond is 10.4%,then the price of this bond is closest to: