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73) Ted owns a bond which is callable in 2.5 years. The bond has a 6 percent coupon, pays
interest semiannually, has a par value of $1,000, and has a yield to call of 6.3 percent. What is
the call premium if the bond currently sells for $1,044.54?
A) $50
B) $60
C) $70
D) $75
E) $80
74) Castle's Furniture Outlet is issuing 20-year, 8 percent callable bonds. These bonds are
callable in 5 years with a call premium of $40. The bonds are being issued at par and pay interest
semi-annually. What is the yield to call?
A) 7.94 percent
B) 8.66 percent
C) 9.00 percent
D) 9.47 percent
E) 10.08 percent
75) Blue Water Homes has 8 percent bonds outstanding that mature in 13 years. The bonds pay
interest semiannually. These bonds have a par value of $1,000 and are callable in 2 years at a
premium of $75. What is the yield to call if the current price is equal to 103.25 percent of par?
A) 7.51 percent
B) 7.70 percent
C) 8.06 percent
D) 8.98 percent
E) 9.66 percent
43
76) Will owns a bond with a make-whole call provision. The bond matures in 13 years but is
being called today. The coupon rate is 8.25 percent with interest paid semiannually. What is the
current call price if the applicable discount rate is 7.75 percent and the make-whole call
provision applies?
A) $932.84
B) $957.11
C) $1,040.51
D) $1,110.28
E) $1,128.66
44
77) Ferris Metals has bonds outstanding which it is calling today under the make-whole call
provision. The bonds mature in 7 years, have a 9 percent coupon, pay interest semiannually, and
have a par value of $1,000. What is today's call price given that the applicable discount rate is
7.05 percent?
A) $879.12
B) $968.35
C) $1,015.55
D) $1,106.30
E) $1,172.71
45
78) Alex purchased a $1,000 par value bond one year ago at a price of $1,016. At the time of
purchase, the bond had 12 years to maturity and a 5 percent, semiannual coupon. Today, the
bond has a yield to maturity of 5.25 percent. What is his realized yield as of today?
A) 0.43 percent
B) 0.86 percent
C) 1.19 percent
D) 1.32 percent
E) 2.60 percent
79) One year ago, you purchased a $1,000 face value bond at a yield to maturity of 9.45 percent.
The bond has a 9 percent coupon and pays interest semiannually. When you purchased the bond,
it had 12 years left until maturity. You are selling the bond today when the yield to maturity is
8.20 percent. What is your realized yield on this bond?
A) 14.54 percent
B) 15.27 percent
C) 16.35 percent
D) 17.60 percent
E) 18.11 percent
47
80) You own a 5.5 percent, semiannual coupon bond that matures in 8 years. The par value is
$1,000 and the current yield to maturity is 6.4 percent. What will the percentage change in the
price of your bond be if the yield to maturity suddenly increases by 50 basis points?
A) -3.05 percent
B) -3.10 percent
C) -3.25 percent
D) -3.30 percent
E) -3.45 percent
48
81) Phil owns a 7 percent, semiannual coupon bond that has a face value of $1,000 and matures
in 16 years. The bond has a current yield to maturity of 7.1 percent. What will the percentage
change in the price of his bond be if interest rates decrease by 50 basis points?
A) 4.33 percent
B) 4.68 percent
C) 4.91 percent
D) 5.17 percent
E) 5.26 percent
82) A $1,000 face value bond has a 9.0 percent coupon and pays interest semiannually. The bond
matures in 2 years and has a yield to maturity of 6.5 percent. What is the Macaulay duration?
A) 1.18 years
B) 1.65 years
C) 1.88 years
D) 2.03 years
E) 2.19 years
83) A zero-coupon bond has a par value of $1,000 and matures in 6.5 years. The yield to
maturity is 5.5 percent. What is the Macaulay duration?
A) 5.67 years
B) 5.81 years
C) 5.92 years
D) 6.26 years
E) 6.50 years
50
84) A bond has a Macaulay duration of 6.25 years. What will be the percentage change in the
bond price if the yield to maturity increases from 6 percent to 6.4 percent?
A) -2.23 percent
B) -2.43 percent
C) -3.30 percent
D) -3.38 percent
E) -3.46 percent
85) The price of a bond decreased by 1.45 percent in response to an increase in the yield to
maturity from 7.2 to 7.6 percent. What is the bond's Macaulay duration?
A) 3.39 years
B) 3.76 years
C) 3.92 years
D) 4.04 years
E) 4.16 years
51
86) A bond has a Macaulay duration of 4.5, a yield to maturity of 5.1 percent, a coupon rate of
6.0 percent, and semiannual interest payments. What is the bond's modified duration?
A) 3.59 years
B) 4.39 years
C) 4.92 years
D) 5.06 years
E) 5.26 years
87) A 6 percent, semiannual coupon bond has a yield to maturity of 7.4 percent and a Macaulay
duration of 5.7. The bond has a modified duration of ________ and will have a ________
percentage increase in price in response to a 25 basis point decrease in the yield to maturity.
A) 5.4829; 1.35
B) 5.4966; 1.32
C) 5.4966; 1.37
D) 5.3073; 1.33
E) 5.3073; 1.38
52
88) A bond has a modified duration of 7.22 and a yield to maturity of 8.1 percent. If interest rates
increase by 75 basis points, the bond's price will decrease by ________ percent.
A) -0.46
B) -0.54
C) -4.60
D) -5.42
E) -6.18
89) The outstanding bonds of Alpha Extracts have a yield to maturity of 7.4 percent and a
modified duration of 11.8. If the yield to maturity instantly decreased to 6.8 percent, the bond's
price would increase/decrease by ________ percent.
A) -7.08
B) -5.67
C) 1.45
D) 5.72
E) 7.08
53
90) A bond has a modified duration of 5.87 years, a par value of $1,000, and a current market
value of $1,008. What is the dollar value of an 01?
A) $0.0698
B) $0.0700
C) $0.5917
D) $0.6401
E) $0.7023
91) Jefferson-Smith bonds are quoted at a price of $952.42 for a $1,000 face value bond. These
bonds have a modified duration of 9.84. What is the dollar value of an 01?
A) $0.0977
B) $0.0963
C) $0.1028
D) $0.9372
E) $0.9767
54
92) A bond has a dollar value of an 01 of 0.0748. What is the yield value of a 32nd?
A) 0.4008
B) 0.4178
C) 0.4229
D) 0.4347
E) 0.4484
93) A bond pays semiannual interest payments of $38.25. What is the coupon rate if the par
value is $1,000?
A) 5.75 percent
B) 6.50 percent
C) 7.65 percent
D) 8.50 percent
E) 9.38 percent
55
94) The Seaside Inn has bonds outstanding with a par value of $1,000 each and a 4.30 percent
coupon. The bonds mature in 7.5 years and pay interest semiannually. What is the current value
of each of these bonds if the yield to maturity is 5.0 percent?
A) $938.40
B) $956.67
C) $988.55
D) $1,004.36
E) $1,009.47
56
95) A $1,000 par value bond is currently valued at $1,050. The bond pays interest semi-annually,
has 9 years to maturity, and has a yield to maturity of 7.72 percent. The coupon rate is ________
percent and the current yield is ________ percent.
A) 7.80; 6.21
B) 8.00; 7.31
C) 8.00; 7.51
D) 8.08; 7.66
E) 8.50; 8.10
57
96) Two bonds have a coupon rate of 4.25 percent, semi-annual payments, face values of $1,000,
and yields to maturity of 5.1 percent. Bond S matures in 4 years and bond L matures in 8 years.
What is the difference in the current prices of these bonds?
A) $24.86
B) $25.78
C) $26.40
D) $27.38
E) $28.02
58
97) Hallmark's Furniture Outlet is issuing 15-year, 7.5 percent callable bonds. These bonds are
callable in 5 years with a call premium of $37.50. The bonds are being issued at par and pay
interest semi-annually. What is the yield to call?
A) 7.94 percent
B) 8.12 percent
C) 9.00 percent
D) 9.47 percent
E) 10.08 percent
98) You own a 6.5 percent, semiannual coupon bond that matures in 12 years. The par value is
$1,000 and the current yield to maturity is 6.4 percent. What will the percentage change in the
price of your bond be if the yield to maturity suddenly increases by 25 basis points?
A) -2.04 percent
B) -2.11 percent
C) -2.26 percent
D) -2.31 percent
E) -2.44 percent
99) A bond has a Macaulay duration of 4.5, a yield to maturity of 5.1 percent, a coupon rate of
6.0 percent, and semiannual interest payments. What is the bond's modified duration?
A) 6.11 years
B) 6.39 years
C) 6.92 years
D) 7.06 years
E) 7.26 years
60
100) A bond has a dollar value of an 01 of 0.0710. What is the yield value of a 32nd?
A) 0.4008
B) 0.4178
C) 0.4229
D) 0.4347
E) 0.4401
