Question

NO NEED FOR EXPLANATION

14. Your brother has just invested in a discount bond that offers an annual coupon rate of 9%, with interest paid annually. The face value of the bond is $1,000 and the difference between its yield to maturity and coupon rate is 4%. The bond matures in 8 years. What is the bond’s price? *

a. $808.05

b. $990.50

c. $750

d. $550

e. None of the above

13. Mining Fund has purchased a bond with 8 years remaining until maturity and a $1,000 face value. The bond is currently selling at a price of $950. The bond offers 9% coupon rate with interest paid annually. The bond may be called in 4 years at a call price of $1,060. What is the bond’s yield to maturity (YTM)? *

a. 9.87%

b. 11.69%

c. 7.87%

d. 5%

e. None of the above

12. You have just invested in a bond that offers an annual coupon rate of 6%, with interest paid annually. The face value of the bond is $1,000 and the interest rate in the market is 5%. The bond matures in 10 years. What is the bond’s price? *

a. $1,000

b. $1,077.21

c. $957

d. $1,050.28

e. None of the above

11. ABC Fund has purchased a bond with 17 years remaining until maturity and a $1,000 face value. The bond is currently selling at a price of $1,070. The bond offers 11% coupon rate with interest paid annually. The bond may be called in 5 years at a call price of $1,050. What is the bond’s yield to call (YTC)? *

a. 15.11%

b. 13%

c. 17.5%

d. 10%

e. None of the above

10. Ahmad Fund has purchased a bond with 17 years remaining until maturity and a $1,000 face value. The bond is currently selling at a price of $1,070. The bond offers 11% coupon rate with interest paid annually. What is the bond’s yield to maturity (YTM)? *

a. 12.11%

b. 15%

c. 17.5%

d. 10.2%

e. None of the above

Answer 1

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