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Q7. If the required rate of return is 12%, what is the value of a zero coupon bond with a face value of $1,000 that matures in 20 years? Assume an annual compounding period. ffice ffice" />
A) $175.30.
B) $103.67.
C) $99.33.
Correct answer is B)
I = 12
PMT = 0
FV = 1,000
N = 20
PV = ?
PV = 103.67
Q8. A zero-coupon bond matures three years from today, has a par value of $1,000 and a yield to maturity of 8.5% (assuming semi-annual compounding). What is the current value of this issue?
A) $78.29.
B) $782.91.
C) $779.01.
Correct answer is C)
The value of the bond is computed as follows:
Bond Value = $1,000 / 1.04256 = $779.01.
N = 6; I/Y = 4.25; PMT = 0; FV = 1,000; CPT → PV = 779.01.
Q9. A 15-year, $1,000 face value zero-coupon bond is priced to yield a return of 8.00% compounded semi-annually. What is the price of the bond, and how much interest will the bond pay over its life, respectively?
Bond Price Interest
A) $308.32 $691.68
B) $691.68 $308.32
C) $389.75 $610.25
Correct answer is A)
Using an equation: Pricezerocoupon = Face Value × [ 1 / ( 1 + i/n)n × 2 ]
Here, Pricezerocoupon = 1000 × [ 1 / (1+ 0.080/2)15 × 2] = 1000 × 0.30832 = 308.32. So, interest = Face – Price = 1000 – 308.32 = 691.68.
Using the calculator: N = (15 × 2) = 30, I/Y = 8.00 / 2 = 4.00, FV = 1000, PMT = 0. PV = -308.32. Again, Face – Price = 1000 – 308.32 = 691.68.
Q10. A zero-coupon bond has a yield to maturity of 9.6% (annual basis) and a par value of $1,000. If the bond matures in 10 years, today's price of the bond would be:
A) $422.41.
B) $391.54.
C) $399.85.
Correct answer is C)
I = 9.6; FV = 1,000; N = 10; PMT = 0; CPT → PV = 399.85
Q11. A 12-year, $1,000 face value zero-coupon bond is priced to yield a return of 7.50% compounded semi-annually. What is the bond’s price?
A) $250.00
B) $419.85.
C) $413.32.
Correct answer is C)
Using an equation: Pricezerocoupon = Face Value × [ 1 / ( 1 + i/n)n × 2] Here, Pricezerocoupon = 1000 × [ 1 / (1+ 0.075/2)12 × 2] = 1000 × 0.41332 = 413.32.
Using the calculator: N = (12 × 2) = 24, I/Y = 7.50 / 2 = 3.75, FV = 1000, PMT = 0. PV = -413.32
Q12. Janet Preen is considering buying a 10-year zero-coupon bond that has a $1,000 face value and is priced to yield 7.25% (semi-annual compounding). What price will Janet pay for the bond?
A) $490.58.
B) $496.62.
C) $1,000.00.
Correct answer is A)
N = 10 × 2 = 20; I/Y = 7.25/2 = 3.625; PMT = 0; FV = 1,000; Compute PV = 490.58 or $1,000/(1.03625)20 = $490.58.
Q13. A 15-year zero coupon bond that has a par value of $1,000 and a required return of 8% would be priced at what value assuming annual compounding periods:
A) $315.
B) $464.
C) $308.
Correct answer is A)
N = 15 FV = 1,000
I = 8
PMT = 0
PV = ?
PV = 315.24
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发表于 2009-3-2 18:03
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