Q21. A coupon bond that pays interest annually has a par value of $1,000, matures in 5 years, and has a yield to maturity of 10%. What is the value of the bond today if the coupon rate is 8%?

A)   $2,077.00.

B)   $1,500.00.

C)   $924.18.

Q22. A bond with a 12% coupon, 10 years to maturity and selling at 88 has a yield to maturity of:

A)   between 13% and 14%.

B)   over 14%.

C)   between 10% and 12%.

Q23. What value would an investor place on a 20-year, $1,000 face value, 10% annual coupon bond, if the investor required a 9% rate of return?

A)   $920.

B)   $879.

C)   $1,091.

Q24. Today an investor purchases a $1,000 face value, 10%, 20-year, semi-annual bond at a discount for $900. He wants to sell the bond in 6 years when he estimates the yields will be 9%. What is the estimate of the future price?

A)   $1,152.

B)   $946.

C)   $1,079.

Q25. An investor purchased a 6-year annual interest coupon bond one year ago. The coupon rate of interest was 10% and par value was $1,000. At the time she purchased the bond, the yield to maturity was 8%. The amount paid for this bond one year ago was:

A)   $1,125.53.

B)   $1,092.46.

C)   $1,198.07.

Q26. A bond with a face value of $1,000 pays a semi-annual coupon of $60. It has 15 years to maturity and a yield to maturity of 16% per year. What is the value of the bond?

B)   $774.84.

B)   $697.71.

C)   $832.88.

Q27. A coupon bond that pays interest semi-annually has a par value of $1,000, matures in 5 years, and has a yield to maturity of 10%. What is the value of the bond today if the coupon rate is 8%?

A)   $1,221.17.

B)   $922.78.

C)   $1,144.31.

Q28. A coupon bond that pays interest annually has a par value of $1,000, matures in 5 years, and has a yield to maturity of 10%. What is the value of the bond today if the coupon rate is 12%?

A)   $927.90.

B)   $1,077.22

C)   $1,075.82.

Q21. A coupon bond that pays interest annually has a par value of $1,000, matures in 5 years, and has a yield to maturity of 10%. What is the value of the bond today if the coupon rate is 8%? fficeffice" />

A)   $2,077.00.

B)   $1,500.00.

C)   $924.18.

Correct answer is C)        

FV = 1,000
N = 5
I = 10
PMT = 80
Compute PV = 924.18.

Q22. A bond with a 12% coupon, 10 years to maturity and selling at 88 has a yield to maturity of:

A)   between 13% and 14%.

B)   over 14%.

C)   between 10% and 12%.

Correct answer is B)        

PMT = 120; N = 10; PV = -880; FV = 1,000; CPT → I = 14.3

Q23. What value would an investor place on a 20-year, $1,000 face value, 10% annual coupon bond, if the investor required a 9% rate of return?

A)   $920.

B)   $879.

C)   $1,091.

Correct answer is C)       

N = 20; I/Y = 9; PMT = 100 (0.10 × 1,000); FV = 1,000; CPT → PV = 1,091.

Q24. Today an investor purchases a $1,000 face value, 10%, 20-year, semi-annual bond at a discount for $900. He wants to sell the bond in 6 years when he estimates the yields will be 9%. What is the estimate of the future price?

A)   $1,152.

B)   $946.

C)   $1,079.

Correct answer is C)        

In 6 years, there will be 14 years (20 ? 6), or 14 × 2 = 28 semi-annual periods remaining of the bond's life So, N = (20 ? 6)(2) = 28; PMT = (1,000 × 0.10) / 2 = 50; I/Y = 9/2 = 4.5; FV = 1,000; CPT → PV = 1,079.

Note: Calculate the PV (we are interested in the PV 6 years from now), not the FV.

Q25. An investor purchased a 6-year annual interest coupon bond one year ago. The coupon rate of interest was 10% and par value was $1,000. At the time she purchased the bond, the yield to maturity was 8%. The amount paid for this bond one year ago was:

A)   $1,125.53.

B)   $1,092.46.

C)   $1,198.07.

Correct answer is B)

N = 6
PMT = (0.10)(1,000) = 100
I = 8
FV = 1,000
PV = ?
PV = 1,092.46

Q26. A bond with a face value of $1,000 pays a semi-annual coupon of $60. It has 15 years to maturity and a yield to maturity of 16% per year. What is the value of the bond?

B)   $774.84.

B)   $697.71.

C)   $832.88.

Correct answer is B)

FV = 1,000; PMT = 60; N = 30; I = 8; CPT → PV = 774.84

Q27. A coupon bond that pays interest semi-annually has a par value of $1,000, matures in 5 years, and has a yield to maturity of 10%. What is the value of the bond today if the coupon rate is 8%?

A)   $1,221.17.

B)   $922.78.

C)   $1,144.31.

Correct answer is B)

FV = 1,000; N = 10; PMT = 40; I = 5; CPT → PV = 922.78.

Q28. A coupon bond that pays interest annually has a par value of $1,000, matures in 5 years, and has a yield to maturity of 10%. What is the value of the bond today if the coupon rate is 12%?

A)   $927.90.

B)   $1,077.22

C)   $1,075.82.

Correct answer is C)

FV = 1,000
N = 5
I = 10
PMT = 120
PV = ?
PV = 1,075.82.

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