Exam 6: 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 five years. The bond certificate indicates that the stated coupon rate for this bond is 8.5% and that the coupon payments are to be made semiannually. Assuming that this bond trades for $1081.73, then the YTM for this bond is closest to ________.

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 10 years. The bond certificate indicates that the stated coupon rate for this bond is 8.0% and that the coupon payments are to be made semiannually. Assuming the appropriate YTM on the Sisyphean bond is 11.1%, then the price that this bond trades for will be closest to ________.

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

Use the information for the question(s) below. Luther Industries needs to raise $25 million to fund a new office complex. The company plans on issuing ten-year bonds with a face value of $1,000 and a coupon rate of 7.0% (annual payments). The following table summarizes the YTM for similar ten-year corporate bonds of various credit ratings: -What rating must Luther receive on these bonds if they want the bonds to be issued at par?

A corporate bond which receives a BBB rating from Standard & Poor's is considered ________.

A company issues a ten-year $1,000 face value bond at par with a coupon rate of 6.1% paid semiannually. The YTM at the beginning of the third year of the bond (8 years left to maturity) is 8.1%. What is the new price of the bond?

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

Use the information for the question(s) below. -The Sisyphean Company has a bond outstanding with a face value of $5000 that matures in 10 years. The bond certificate indicates that the stated coupon rate for this bond is 8.9% and that the coupon payments are to be made semiannually. How much will each semiannual coupon payment be?

Consider the following yields to maturity on various one-year, zero-coupon securities: The credit spread of the BBB corporate bond is closest to ________.

Which of the following statements regarding bonds and their terms is FALSE?

How are investors in zero-coupon bonds compensated for making such an investment?

Use the figure for the question(s) below. -The current zero-coupon yield curve for risk-free bonds is shown above. What is the price of a zero-coupon, four-year, risk-free bond of $100?

What is the dirty price of a bond?

+---------+---------+---------+----- . . . -------+---------+ A corporation issues a bond that generates the above cash flows. If the periods are of 3-month intervals, which of the following best describes that bond?

Use the figure for the question(s) below. -A risk-free, zero-coupon bond with a face value of $10,000 has 15 years to maturity. If the YTM is 6.1%, which of the following would be closest to the price this bond will trade at?

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 5 years. The bond certificate indicates that the stated coupon rate for this bond is 8.1% and that the coupon payments are to be made semiannually. Assuming the appropriate YTM on the Sisyphean bond is 10.6%, then this bond will trade at ________.

Consider a zero-coupon bond with a $1000 face value and 10 years left until maturity. If the YTM of this bond is 10.2%, then the price of this bond is closest to ________.

What is the yield to maturity of a ten-year, $10,000 bond with a 5.4% coupon rate and semiannual coupons if this bond is currently trading for a price of $9207.93?

Which of the following statements regarding bonds and their terms is FALSE?

Which of the following best shows the timeline for cash flows from a five-year bond with a face value of $2,000, a coupon rate of 5.0%, and semiannual payments?