Exam 7: Valuing Bonds

Reconsider a 3.25 percent TIPS that was issued with CPI reference of 186.7.The bond is purchased at the beginning of the year (after the interest payment),when the CPI was 197.5.For the interest in the middle of the year,the CPI was 201.1.Now,at the end of the year,the CPI is 202.4 and the interest payment has been made.What is the total return of the TIPS in percentage terms for the year? (Assume semi-annual interest payments and $1,000 par value.)

Which of the following statements is correct?

A 5.125 percent TIPS has an original reference CPI of 191.8.If the current CPI is 188.3,what is the par value of the TIPS?

Which of the following is NOT a factor that determines the coupon rate of a company's bonds?

A bond's current yield is defined as:

Reconsider a 2.75 percent TIPS that was issued with CPI reference of 191.7.The bond is purchased at the beginning of the year (after the interest payment),when the CPI was 197.5.For the interest in the middle of the year,the CPI was 205.2.Now,at the end of the year,the CPI is 204.4 and the interest payment has been made.What is the total return of the TIPS in percentage terms for the year? (Assume semi-annual interest payments and $1,000 par value.)

Which of the following is a debt security whose payments originate from other loans,such as credit card debt,auto loans,and home equity loans?

What's the current yield of an 8.15 percent coupon corporate bond quoted at a price of 94.30?

What's the current yield of a 5.75 percent coupon corporate bond quoted at a price of 103.05?

What's the taxable equivalent yield on a municipal bond with a yield to maturity of 3.9 percent for an investor in the 35 percent marginal tax bracket?

A 5.75 percent coupon bond with 12 years left to maturity is offered for sale at $978.83.What yield to maturity is the bond offering? (Assume interest payments are paid semi-annually and par value is $1,000.)