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64.
Last year, you purchased a "TIPS" at par. Since that time, both market
interest rates and the inflation rate have increased by 0.25 percent. Your
bond has most likely done which one of the following since last year?
65.
Recently, you discovered a putable income bond that is convertible. If you
purchase this bond, you will have the right to do which of the following?
I. force the issuer to repurchase the bond prior to maturity
II. choose when you wish to receive interest payments
III. convert the bond into a TIPS
IV. convert the bond into equity shares
66.
"Cat" bonds are primarily designed to help:
67.
Mary is a retired widow who is financially dependent upon the interest
income produced by her bond portfolio. Which one of the following bonds is
the least suitable for her to own?
68.
Al is retired and enjoys his daily life. His one concern is that his bonds
provide a steady stream of income that will continue to allow him to have
69.
Phil has researched TLM Technologies and believes the firm is poised to
vastly increase in value. He wants to invest in this company. Phil has
decided to purchase TLM Technologies bonds so that he can have a steady
stream of interest income. However, he still wishes that he could share in
the firm's success along with TLM's shareholders. Which one of the
following bond features will help Phil fulfill his wish?
70.
A U.S. Treasury bond that is quoted at 100:11 is selling:
71.
Which of the following correctly describe U.S. Treasury bonds?
I. have a "tick" size of 1/32
II. highly liquid
III. quoted in dollars and cents
IV. quoted at the dirty price
72.
A 6-year, $1,000 face value bond issued by Taylor Tools pays interest
semiannually on February 1 and August 1. Assume today is October 1. What
will the difference, if any, be between this bond's clean and dirty prices
today?
73.
Today, June 15, you want to buy a bond with a quoted price of 98.64. The
bond pays interest on January 1 and July 1. Which one of the following
prices represents your total cost of purchasing this bond today?
74.
Which one of the following rates represents the change, if any, in your
purchasing power as a result of owning a bond?
75.
Which one of the following statements is correct?
76.
The Fisher Effect primarily emphasizes the effects of _____ on an investor's
rate of return.
77.
You are trying to compare the present values of two separate streams of
cash flows which have equivalent risks. One stream is expressed in nominal
values and the other stream is expressed in real values. You decide to
discount the nominal cash flows using a nominal annual rate of 8 percent.
What rate should you use to discount the real cash flows?
78.
Which of the following statements is correct concerning the term structure
of interest rates?
I. Expectations of lower inflation rates in the future tend to lower the slope
of the term structure of interest rates.
II. The term structure of interest rates includes both an inflation premium
and an interest rate risk premium.
III. The real rate of return has minimal, if any, affect on the slope of the term
structure of interest rates.
IV. The term structure of interest rates and the time to maturity are always
directly related.
79.
Which two of the following factors cause the yields on a corporate bond to
differ from those on a comparable Treasury security?
I. inflation risk
II. interest rate risk
III. taxability
IV. default risk
80.
The bonds issued by Stainless Tubs bear an 8 percent coupon, payable
semiannually. The bonds mature in 11 years and have a $1,000 face value.
Currently, the bonds sell for $952. What is the yield to maturity?
81.
Greenbrier Industrial Products' bonds have a 7.60 percent coupon and pay
interest annually. The face value is $1,000 and the current market price is
$1,062.50 per bond. The bonds mature in 16 years. What is the yield to
maturity?
82.
Collingwood Homes has a bond issue outstanding that pays an 8.5 percent
coupon and matures in 16.5 years. The bonds have a par value of $1,000
and a market price of $944.30. Interest is paid semiannually. What is the
yield to maturity?
83.
Oil Well Supply offers 7.5 percent coupon bonds with semiannual payments
and a yield to maturity of 7.68 percent. The bonds mature in 6 years. What
is the market price per bond if the face value is $1,000?
