Exam 6: Bonds

A company issues a ten-year $1000 bond at par with a coupon rate of 6% paid semi-annually.The YTM at the beginning of the third year of the bond (8 years left to maturity)is 7.8%.What is the new price of the bond?

Treasury bills have original maturities from one to ten years,while Treasury notes have original maturities of more than ten years.

Which of the following best illustrates why a bond is a type of loan?

Which of the following bonds will be most sensitive to a change in interest rates if all bonds have the same initial yield to maturity?

A corporate bond which receives a BBB rating from Standard and Poor's is considered

A bond has three years to maturity,a $2000 face value,and a 6.3% coupon rate with annual coupons.What is its yield to maturity if it is currently trading at $1801?

A bond is currently trading below par.Which of the following must be TRUE about that bond?

A bond with semi-annual coupon payments of $1,200 has three years to maturity and a yield to maturity of 10%.If the price of this bond is $20,467.11,what is its face value?

An investor purchases a 30-year,zero-coupon bond with a face value of $1000 and a yield to maturity of 6.5%.He sells this bond ten years later.What is the internal rate of return (IRR)on his investment,assuming yield to maturity does NOT change?

A ten-year,zero-coupon bond with a yield to maturity of 6% has a face value of $1000.An investor purchases the bond when it is initially traded,and then sells it four years later.What is the internal rate of return (IRR)of this investment,assuming the yield to maturity does NOT change?

Use the table for the question(s)below. Consider the following yields to maturity on various one-year zero-coupon securities: - The credit spread of the B corporate bond is closest to:

Why do bond prices increase as the next coupon payment gets closer?

A firm issues 20-year bonds with a coupon rate of 4.8%,paid semi-annually.The credit spread for this firm's 20-year debt is 1.2%.New 20-year Treasury notes are being issued at par with a coupon rate of 4.6%.What should the price of the firm's outstanding 20-year bonds be if their face value is $1000?

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 three-year zero-coupon bond is closest to:

Assuming the appropriate YTM on the Sisyphean bond is 9.0%,then the price that this bond trades for will be closest to:

What is the yield to maturity of the zero-coupon bond in the above table?

Which of the following bonds is trading at a premium?

Which of the following risk-free,zero-coupon bonds could be bought for the lowest price?

The only cash payment an investor in a zero-coupon bond receives is the face value of the bond on its maturity date.

A bond,which is currently trading at $3440,has four years to maturity,a $4000 face value,and a 3.5% coupon rate with annual coupons.Which of the following is its approximate yield to maturity?