Exam 7: Valuing Bonds

Consider the following three bond quotes; a Treasury note quoted at 102.30,and a corporate bond quoted at 99.45,and a municipal bond quoted at 102.45.If the Treasury and corporate bonds have a par value of $1,000 and the municipal bond has a par value of $5,000,what is the price of these three bonds in dollars?

Which of the following statements is correct?

A bond with 23 years to maturity is selling for $991 and has a yield to maturity of 8.12 percent.If this bond pays its coupon payments semi-annually and par value is $1,000,what is the bond's annual coupon rate?

A 6 percent corporate coupon bond is callable in 10 years for a call premium of one year of coupon payments.Assuming a par value of $1,000,what is the price paid to the bondholder if the issuer calls the bond?

Which of the following terms means the chance that future interest payments will have to be reinvested at a lower interest rate?

Consider the following bond quote: a municipal bond quoted at 101.25.If the municipal bond has a par value of $5,000,what is the price of the bond in dollars?

If a bond is selling at par value,which of the following statements is correct?

Which of the following statements is true?

A bond issued by a corporation on May 1,1999,is scheduled to mature on May 1,2019.If today is May 2,2009,what is this bond's time to maturity? (Assume annual interest payments.)

Which of the following is true regarding U.S.Government Agency Securities?

A 7 percent coupon bond has 10 years to maturity and could be called in three years.If the bond is called,investors will earn 5.5 percent.The call premium is one year of coupon payments.If coupon payments are made semi-annually and par value is $1,000,what is the bond's yield to maturity?

What is the taxable equivalent yield on a municipal bond with a yield to maturity of 4.5 percent for an investor in the 39 percent marginal tax bracket?

A 5.5 percent corporate coupon bond is callable in four years for a call premium of one year of coupon payments.Assuming a par value of $1,000,what is the price paid to the bondholder if the issuer calls the bond? (Assume annual interest payments.)

To increase the liquidity for the home mortgage market,Fannie Mae and Freddie Mac purchased home mortgages from banks and other lenders.They combined the mortgages into diversified portfolios of loans and issued:

A client in the 35 percent marginal tax bracket is comparing a municipal bond that offers a 4.25 percent yield to maturity and a similar-risk corporate bond that offers a 5.10 percent yield.Which bond will give the client more profit after taxes?

Which of the following is an important advantage to the issuer of a bond with a call provision?

Which of the following determines the dollar amount of interest paid to bondholders?

A 5.5 percent coupon municipal bond has 16 years left to maturity and has a price quote of 92.55.The bond can be called in nine years.The call premium is one year of coupon payments.Compute the bond's yield to maturity and yield to call.Assume interest payments are paid semi-annually and a par value of $5,000.

An 8 percent coupon municipal bond has 15 years left to maturity and has a price quote of 98.5.The bond can be called in six years.The call premium is one year of coupon payments.Compute the bond's yield to call and determine if the bond will be called.Assume interest payments are paid semi-annually and a par value of $5,000.

The bond's annual coupon rate divided by its market price is referred to as the: