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92) The Federal Reserve is offering Treasury bills with a par value of $10 billion for sale. They
have received $3 billion of noncompetitive bids. The competitive bids for a $10,000 par value
bond are: (Qty in billions)
Bidder
Price Bid
Qty Bid
A
$
9,900
$
1.00
B
$
9,850
$
5.00
C
$
9,800
$
4.00
D
$
9,750
$
9.00
How much money will the Federal Reserve raise from this offering?
A) $9.92 billion
B) $9.88 billion
C) $9.85 billion
D) $9.84 billion
E) $9.80 billion
93) A municipal bond is yielding 4.8 percent. Jeremy has a marginal tax rate of 24 percent. What
is his equivalent taxable yield?
A) 2.18 percent
B) 4.58 percent
C) 6.15 percent
D) 6.32 percent
E) 7.18 percent
94) You have a marginal tax rate of 35 percent and an average tax rate of 29 percent. Municipal
bonds in your area are yielding 4.20 percent. What is your equivalent taxable yield?
A) 5.16 percent
B) 5.93 percent
C) 5.13 percent
D) 6.25 percent
E) 6.46 percent
95) Municipal bonds are yielding 4.8 percent currently. Alicia has a marginal tax rate of 35
percent and Yvonne has a marginal tax rate of 22 percent. Alicia's equivalent taxable yield is
________ percent and Yvonne's is ________ percent.
A) 7.50; 5.86
B) 7.39; 6.15
C) 6.53; 5.86
D) 6.53; 6.15
E) 8.29; 5.07
96) Municipal bonds are yielding 4.4 percent if they are insured and 4.7 percent if they are
uninsured. Your marginal tax rate is 28 percent. Your equivalent taxable yield on the insured
bonds is ________ percent and on the uninsured bonds is ________ percent.
A) 5.89; 6.27
B) 6.11; 6.53
C) 6.31; 6.81
D) 6.67; 7.10
E) 6.76; 7.10
97) You own a corporate bond which is yielding 4.9 percent. What is your after-tax yield if your
marginal tax rate is 28 percent?
A) 2.90 percent
B) 3.53 percent
C) 4.20 percent
D) 4.58 percent
E) 5.15 percent
98) Laura has an average tax rate of 22 percent and a marginal tax rate of 28 percent. What is her
after-tax yield on a corporate bond which has a 6.7 percent yield?
A) 4.82 percent
B) 5.09 percent
C) 5.47 percent
D) 6.00 percent
E) 11.34 percent
99) Jeff owns a taxable bond portfolio which is yielding 8.76 percent. His after-tax yield is 6.57
percent. What is his marginal tax rate?
A) 25 percent
B) 28 percent
C) 31 percent
D) 32 percent
E) 34 percent
100) A corporate bond is yielding 7.31 percent and a municipal bond is yielding 4.75 percent.
What is the critical marginal tax rate?
A) 28 percent
B) 30 percent
C) 33 percent
D) 35 percent
E) 38 percent
101) Sonya has a marginal tax rate of 36 percent. A corporate bond is yielding 7.4 percent and a
municipal bond is yielding 3.6 percent. Sonya should invest in the ________ bond because the
critical marginal tax rate is ________ percent.
A) corporate; 17
B) corporate; 34
C) corporate; 51
D) municipal; 43
E) municipal; 51
102) Lester is considering a municipal bond yielding 5.5 percent and a corporate bond yielding
8.2 percent. His marginal tax rate is 28 percent. He should invest in the ________ bond because
the critical marginal tax rate is ________ percent.
A) corporate; 26
B) corporate; 29
C) corporate; 33
D) municipal; 35
E) municipal; 37
103) A $5,000 face value municipal bond matures in 12 years and is priced at $4,850. The
coupon rate is 5.5 percent with interest paid semiannually. What is the yield to maturity on the
bond?
A) 4.77 percent
B) 5.14 percent
C) 5.40 percent
D) 5.61 percent
E) 5.85 percent
104) A $5,000 face value municipal bond matures in 6 years and has a market value of $5,110.
The coupon rate is 3.5 percent with interest paid semiannually. What is the yield to maturity?
A) 2.92 percent
B) 3.10 percent
C) 3.73 percent
D) 5.13 percent
E) 6.38 percent
105) A bond that is currently selling for $925.44 has a conversion price of $25.00. If the par
value is $1,000, what is the conversion ratio?
A) 35
B) 38
C) 40
D) 42
E) 44
106) A bond is currently priced at $1,055.40 and has a par value of $1,000. If the conversion
ratio is 24, what is the conversion price?
A) $35.71
B) $37.04
C) $38.46
D) $40.00
E) $41.67
107) A semi-annual coupon bond has a 5 percent coupon rate, a $1,000 face value, a current
value of $1,020, and 3 years until the first call date. What is the call price if the yield to call is
5.5 percent?
A) $1,000
B) $1,020
C) $1,040
D) $1,060
E) $1,080
108) A Treasury bond has a quoted bid price of 95:12 and a quoted ask price of 95:25. What is
the amount you will receive if you sell your bond that has a par value of $20,000?
A) $19,016.12
B) $19,050.45
C) $19,062.60
D) $19,075.00
E) $19,120.31
109) A STRIPS matures in 7 years, has a face value of $17,000, and has a yield to maturity of
3.5 percent. What is the price?
A) $11,854.59
B) $12,366.53
C) $12,684.75
D) $13,122.01
E) $13,334.20
110) The Federal Reserve is offering Treasury bills with a par value of $50 billion for sale. They
have received $22 billion of noncompetitive bids. The competitive bids for a $10,000 par value
bond are:
How much money will the Federal Reserve raise from this offering?
A) $49.05 billion
B) $49.10 billion
C) $49.20 billion
D) $49.30 billion
E) $49.50 billion
111) You own a corporate bond which is yielding 7.2 percent. What is your after-tax yield if
your marginal tax rate is 28 percent?
A) 2.90 percent
B) 3.53 percent
C) 4.20 percent
D) 4.58 percent
E) 5.18 percent
112) A $5,000 face value municipal bond matures in 10 years and is priced at $4,850. The
coupon rate is 4.75 percent with interest paid semiannually. What is the yield to maturity on the
bond?
A) 4.77 percent
B) 5.14 percent
C) 5.40 percent
D) 5.61 percent
E) 5.85 percent
