Reading 64:Introduction to the Valuation of Debt Securiti

par, interest, selling, today, value

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.