Question 1

A Treasury bond is quoted at a price of 105: 15. What is the market price of this bond if the face value is $5,000?

Accepted Answer

A)  $5,005.15
B)  $5,105.15
C)  $5,257.50
D)  $5,273.44
E)  $5,515.00F) B) and E)
G) B) and D)

Question 2

Today, June 15, you want to buy a bond with a quoted price of 98.64. The bond pays interest on January 1 and July 1. Which one of the following prices represents your total cost of purchasing this bond today?

Accepted Answer

A)  clean price
B)  dirty price
C)  asked price
D)  quoted price
E)  bid priceF) A) and B)
G) A) and C)

Question 3

Phil has researched TLM Technologies and believes the firm is poised to vastly increase in value. He wants to invest in this company. Phil has decided to purchase TLM Technologies bonds so that he can have a steady stream of interest income. However, he still wishes that he could share in the firm's success along with TLM's shareholders. Which one of the following bond features will help Phil fulfill his wish?

Accepted Answer

A)  put provision
B)  positive covenant 
C)  warrant
D)  crossover rating
E)  call provisionF) C) and D)
G) A) and B)

Question 4

A corporate bond was quoted yesterday at 102.16 while today's quote is 102.19. What is the change in the value of a bond that has a face value of $6,000?

Accepted Answer

A)  $0.30
B)  $1.80
C)  $3.00
D)  $18.00
E)  $180.00F) A) and E)
G) B) and C)

Question 5

An 8 percent corporate bond that pays interest semi-annually was issued last year. Which two of the following most likely apply to this bond today if the current yield-to-maturity is 7 percent?
I. a structure as an interest-only loan
II. a current yield that equals the coupon rate
III. a yield-to-maturity equal to the coupon rate
IV. a market price that differs from the face value

Accepted Answer

A)  I and III only
B)  I and IV only
C)  II and III only
D)  II and IV only
E)  III and IV onlyF) A) and B)
G) A) and C)

Question 6

A Treasury yield curve plots Treasury interest rates relative to which one of the following?

Accepted Answer

A)  market rates
B)  comparable corporate bond rates
C)  the risk-free rate
D)  inflation
E)  maturityF) A) and B)
G) A) and C)

Question 7

Which of the following defines a note?
I. secured
II. unsecured
III. maturity less than 10 years
IV. maturity in excess of 10 years

Accepted Answer

A)  III only
B)  I and III only
C)  I and IV only
D)  II and III only
E)  II and IV onlyF) None of the above
G) B) and C)

Question 8

You purchased an investment which will pay you $8,000, in real dollars, a year for the next three years. Each payment will be received at the end of the period with the first payment occurring one year from today. The nominal discount rate is 7.5 percent and the inflation rate is 2.9 percent. What is the present value of these payments?

Accepted Answer

A)  $21,720
B)  $22,004
C)  $22,511
D)  $23,406
E)  $23,529F) C) and D)
G) A) and E)

Exam 7: Interest Rates and Bond Valuation

Correct Answer
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Correct Answer
verified

Which of the following defines a note? I. secured II. unsecured III. maturity less than 10 years IV. maturity in excess of 10 years

Correct Answer
verified

Correct Answer
verified

A corporate bond was quoted yesterday at 102.16 while today's quote is 102.19. What is the change in the value of a bond that has a face value of $6,000?

Correct Answer
verified

Today, June 15, you want to buy a bond with a quoted price of 98.64. The bond pays interest on January 1 and July 1. Which one of the following prices represents your total cost of purchasing this bond today?

Correct Answer
verified

A Treasury yield curve plots Treasury interest rates relative to which one of the following?

Correct Answer
verified

A Treasury bond is quoted at a price of 105: 15. What is the market price of this bond if the face value is $5,000?

Correct Answer
verified

Exam 7: Interest Rates and Bond Valuation

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following defines a note? I. secured II. unsecured III. maturity less than 10 years IV. maturity in excess of 10 years

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A corporate bond was quoted yesterday at 102.16 while today's quote is 102.19. What is the change in the value of a bond that has a face value of $6,000?

Correct AnswerverifiedShow Answer

Today, June 15, you want to buy a bond with a quoted price of 98.64. The bond pays interest on January 1 and July 1. Which one of the following prices represents your total cost of purchasing this bond today?

Correct AnswerverifiedShow Answer

A Treasury yield curve plots Treasury interest rates relative to which one of the following?

Correct AnswerverifiedShow Answer

A Treasury bond is quoted at a price of 105: 15. What is the market price of this bond if the face value is $5,000?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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