Question 1

One year ago, you purchased a $1,000 face value bond for a clean price of $980.The bond currently has seven years remaining until maturity, pays a coupon payment of $45 every six months, and has a yield to maturity of 6.87 percent.What is the percentage change in the bond price over the past year?

Accepted Answer

A)  -6.24 percent
B)  -14.70 percent
C)  15.48 percent
D)  13.96 percent
E)  6.61 percentF) C) and E)
G) A) and B)

Question 2

What term is used to describe an account that a bond trustee manages for the sole purpose of redeeming bonds early?

Accepted Answer

A)  Registered account
B)  Bearer account
C)  Call account
D)  Sinking fund
E)  Premium fundF) B) and E)
G) None of the above

Question 3

A bond has a $1,000 face value, a market price of $989, and pays interest payments of $69.50 every year.What is the coupon rate?

Accepted Answer

A)  6.76 percent
B)  7.00 percent
C)  7.03 percent
D)  6.95 percent
E)  8.14 percentF) C) and D)
G) A) and D)

Question 4

Which one of the following statements is true?

Accepted Answer

A)  The current yield on a par value bond will exceed the bond's yield to maturity.
B)  The yield to maturity on a premium bond exceeds the bond's coupon rate.
C)  The current yield on a premium bond is equal to the bond's coupon rate.
D)  A premium bond has a current yield that exceeds the bond's coupon rate.
E)  A discount bond has a coupon rate that is less than the bond's yield to maturity.F) C) and E)
G) B) and C)

Exam 6: Interest Rates and Bond Valuation

One year ago, you purchased a $1,000 face value bond for a clean price of $980.The bond currently has seven years remaining until maturity, pays a coupon payment of $45 every six months, and has a yield to maturity of 6.87 percent.What is the percentage change in the bond price over the past year?

Correct Answer
verified

What term is used to describe an account that a bond trustee manages for the sole purpose of redeeming bonds early?

Correct Answer
verified

A bond has a $1,000 face value, a market price of $989, and pays interest payments of $69.50 every year.What is the coupon rate?

Correct Answer
verified

Which one of the following statements is true?

Correct Answer
verified

Exam 6: Interest Rates and Bond Valuation

One year ago, you purchased a $1,000 face value bond for a clean price of $980.The bond currently has seven years remaining until maturity, pays a coupon payment of $45 every six months, and has a yield to maturity of 6.87 percent.What is the percentage change in the bond price over the past year?

Correct AnswerverifiedShow Answer

What term is used to describe an account that a bond trustee manages for the sole purpose of redeeming bonds early?

Correct AnswerverifiedShow Answer

A bond has a $1,000 face value, a market price of $989, and pays interest payments of $69.50 every year.What is the coupon rate?

Correct AnswerverifiedShow Answer

Which one of the following statements is true?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified