Exam 12: Bond Fundamentals and Valuation

If the yield to maturity for a par value TIPS bond with eight years to maturity is 3 percent, and the yield to maturity of a U.S Treasury note with 8 years is 4.25 percent, this implies that

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) -Refer to Exhibit 12.1. What is the estimated yield on Treasury securities?

A bond's price is determined by the issue's coupon rate, length to maturity, and the prevailing yield in the market.

Suppose you have a 12 percent, 20-year bond traded at $850. If it is callable in 5 years at $1,100, what is the bond's yield to call? Interest is paid semiannually.

Samurai bonds are yen-denominated bonds sold in markets outside Japan by international syndicates.

Calculate the price of a zero-coupon bond with yield to maturity of 8.75 percent, a face value of $1000, and maturing in five years.

The yield to call is a more conservative yield measure whenever the price of a callable bond is quoted at a value

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) XLR Corporation just issued a $1,000 par value bond with a 7 percent yield to maturity, twenty years to maturity, with an 8 percent semi-annual coupon rate. -Refer to Exhibit 12.2. If market interest rates are constant, what will the price of the XLR Corporate bond be in three years?

The term structure of interest rates is a dynamic function that relates the term to maturity to the yield to maturity of bonds.

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) XLR Corporation just issued a $1,000 par value bond with a 7 percent yield to maturity, twenty years to maturity, with an 8 percent semi-annual coupon rate. -Refer to Exhibit 12.2. If market interest rates rise to 10 percent, what will the price of the XLR Corporate bond be in three years?

TIPS are U.S Treasury securities where the coupon rate is

Junk bonds are high yield bond bonds rated below

A 15-year bond, purchased five years ago, has a $1,000 par value bond, a 10 percent coupon, and a yield to maturity of 12 percent. Interest is paid annually. The bond's price is

What is the current price of a zero-coupon bond with a 6 percent yield to maturity that matures in 15 years?

The market for short-term issues with maturities of one year or less is commonly known as the money market.

High-yield bonds are considered "investment" grade.

Consider a bond with a price of $944.44 and a coupon of 8 1/2 percent. What is the current yield?

Of the following provisions that may be found in a bond indenture, which would tend to reduce the coupon interest rate?

____ measures the expected rate of return of a bond assuming that you sell it prior to its maturity.

The coupon of a bond indicates the income that the bond investor will receive over the life of the bond.