Exam 10: Bond Prices and Yields

A bond has a par value of $1,000, a time to maturity of 10 years, and a coupon rate of 8% with interest paid annually. If the current market price is $750, what is the capital gain yield of this bond over the next year?

A coupon bond that pays interest semiannually has a par value of $1,000, matures in 8 years, and has a yield to maturity of 6%. If the coupon rate is 7%, the intrinsic value of the bond today will be ________.

A debenture is ________.

If the quote for a Treasury bond is listed in the newspaper as 98.2812 bid, 98.4062 ask, the actual price at which you can purchase this bond given a $10,000 par value is ________.

One-, two-, and three-year maturity, default-free, zero-coupon bonds have yields to maturity of 7%, 8%, and 9%, respectively. What is the implied 1-year forward rate 1 year from today?

Bonds issued in the currency of the issuer's country but sold in other national markets are called ________.

The ________ of a bond is computed as the ratio of the annual coupon payment to the market price.

According to the liquidity preference theory of the term structure of interest rates, an increase in the yield on long-term corporate bonds versus short-term bonds could be due to ________.

Everything else equal, the ________ the maturity of a bond and the ________ the coupon, the greater the sensitivity of the bond's price to interest rate changes.

A 6% coupon U.S. Treasury note pays interest on May 31 and November 30 and is traded for settlement on August 10. The accrued interest on the $100,000 face amount of this note is ________.

Consider the following $1,000 par value zero-coupon bonds: The expected 1-year interest rate 2 years from now should be ________.

A mortgage bond is ________.

A convertible bond has a par value of $1,000, but its current market price is $950. The current price of the issuing company's stock is $19, and the conversion ratio is 40 shares. The bond's conversion premium is ________.

Bonds rated ________ or better by Standard & Poor's are considered investment grade.

If the price of a $10,000 par Treasury bond is $10,237.50, the quote would be listed in the newspaper as ________.

The ________ is the document that defines the contract between the bond issuer and the bondholder.

$1,000 par value zero-coupon bonds (ignore liquidity premiums) One year from now bond C should sell for ________ (to the nearest dollar).

A bond pays a semiannual coupon, and the last coupon was paid 61 days ago. If the annual coupon payment is $75, what is the accrued interest? (Assume 182 days in the 6-month period.)

What is the lowest grade a bond can receive and still be considered investment grade?

The primary difference between Treasury notes and bonds is ________.