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Exam 10: Bond Prices and Yields

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Question 31

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You buy an 8 year $1000 par value bond today that has a 6% yield and a 6% annual payment coupon.In one year promised yields have risen to 7%.Your one year holding period return was ___.

A) 0.61%
B) -5.39%
C) 1.28%
D) -3.25%

E) A) and D)
F) C) and D)

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Question 32

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If the quote for a Treasury bond is listed in the newspaper as 98:09 bid,98:13 ask,the actual price for you to purchase this bond given a $10,000 par value is _____________.

A) $9,828.12
B) $9,809.38
C) $9,840.62
D) $9,813.42

E) B) and C)
F) A) and B)

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Question 33

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$1,000 par value zero coupon bonds, ignore liquidity premiums -The expected one-year interest rate one year from now should be about _________.

Which one of the following statements is correct?

A coupon bond which pays interest of $60 annually,has a par value of $1,000,matures in 5 years,and is selling today at a $75.25 discount from par value.The current yield on this bond is _________.

When discussing bonds,convexity relates to the _______.

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

You buy a TIPS at issue at par for $1,000.The bond has a 3% coupon.Inflation turns out to be 2%,3% and 4% over the next three years.The total annual coupon income you will receive in year three is _________.

$1,000 par value zero coupon bonds, ignore liquidity premiums -The expected two year interest rate three years from now should be _________.

A __________ bond is a bond where the bondholder has the right to cash in the bond before maturity at a specific price after a specific date.

You can be sure that a bond will sell at a premium to par when _________.

A coupon bond pays semi-annual interest is reported as having an ask price of 117% of its $1,000 par value in the Wall Street Journal.If the last interest payment was made 2 months ago and the coupon rate is 6%,the invoice price of the bond will be _________.

Consider two bonds,A and B.Both bonds presently are selling at their par value of $1,000.Each pay interest of $120 annually.Bond A will mature in 5 years while bond B will mature in 6 years.If the yields to maturity on the two bonds change from 12% to 14%,_________.

The price of a bond at the beginning of a period is $980.00 and $975.00 at the end of the period.What is the holding period return if the annual coupon rate is 4.5%?

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 $100,000 face amount of this note is _________.

A bond has a 5% coupon rate.The coupon is paid semi-annually and the last coupon was paid 35 days ago.If the bond has a par value of $1,000,what is the accrued interest?

An investor pays $989.40 for a bond.The bond has an annual coupon rate of 4.8%.What is the current yield on this bond?

You buy a bond with a $1,000 par today for a price of $875.The bond has 6 years to maturity and makes annual coupon payments of $75 per year.You hold the bond to maturity but you do not reinvest any of your coupons.What was your effective EAR over the holding period?

You purchased a 5-year annual interest coupon bond one year ago.Its coupon interest rate was 6% and its par value was $1,000.At the time you purchased the bond,the yield to maturity was 4%.If you sold the bond after receiving the first interest payment and the bond's yield to maturity had changed to 3%,your annual total rate of return on holding the bond for that year would have been approximately _________.

The price on a treasury bond is 104:21 with a yield to maturity of 3.45%.The price on a comparable maturity corporate bond is 103:11 with a yield to maturity of 4.59%.What is the approximate percentage value of the credit risk of the corporate bond?