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Q7. Which of the following statements concerning U.S. Treasury securities is least accurate? ffice ffice" />
A) Treasury bonds have original maturities of 20 to 30 years.
B) Treasury Inflation Protected Securities pay a fixed coupon rate.
C) Treasury notes carry no coupon.
Correct answer is C)
T-notes are coupon-bearing instruments. TIPS pay a fixed coupon rate on a par value that is adjusted for inflation.
Q8. U.S. Treasury bonds that provide some protection from inflation by periodic adjustments of the principal value are called:
A) CPI Adjustable Bonds.
B) Inflation Linked Treasury Securities.
C) Treasury Inflation Protected Securities.
Correct answer is C)
Beginning in 1997, the U.S. Treasury began to offer Treasury Inflation Protected Securities, which are commonly known as TIPS. The principal value is periodically adjusted for changes in CPI. The periodic coupon payment, based upon the adjusted principal amount, reflects any changes in inflation.
Q9. The annual payment of a 20-year, semi-annual pay bond with a $5,000 par value and a 6.875% coupon rate currently trading at 89.28 is closest to:
A) $343.75.
B) $171.88.
C) $153.45.
Correct answer is A)
$5,000 × 0.06875 = $343.75.
Q10. Which of the following statements about U.S. Treasury Inflation Protection Securities (TIPS) is most accurate?
A) Adjustments to principal values are made annually.
B) The inflation-adjusted principal value cannot be less than par.
C) The coupon rate is fixed for the life of the issue.
Correct answer is C)
The coupon rate is set at a fixed rate determined via auction. This is called the real rate. The principal that serves as the basis of the coupon payment and the maturity value is adjusted semiannually. Because of the possibility of deflation, the adjusted principal value may be less than par (however, at maturity the Treasury redeems the bonds at the greater of the inflation-adjusted principal and the initial par value).
Q11. If an investor purchases a 9 ?s 2001 Feb. $10,000 par Treasury Note at 101:11 and holds it for exactly one year, what is the rate of return if the selling price is 101:17?
A) 9.75%.
B) 8.75%.
C) 9.81%.
Correct answer is C)
Purchase price = [(101 + 11 / 32) / 100] × 10,000 = $10,134.375
Selling price = [(101 + 17 / 32) / 100] × 10,000 = $10,153.125
Interest = 9?% of 10,000 = $975.00
Return = (Pend ? Pbeg + Interest) / Pbeg = (10,153.125 ? 10,134.375 + 975.00) / 10134.375 = 9.81%
Q12. Given that a Treasury bond has a par value of $50,000 and is currently offered at a quoted price of 98:5, what is the dollar amount that an investor must pay in order to purchase the bond?
A) $49,078.13.
B) $98.16.
C) $4,907,812.50.
Correct answer is A)
If the quoted price is 98:5 this equals 98 5/32 which equals 98.15625% and means that the dollar amount is:
0.9815625 × $50,000 = $49,078.13
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发表于 2009-3-2 16:16
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