62.
A 10% coupon, annual payments, bond maturing in 10 years, is expected to make all
coupon payments, but to pay only 50% of par value at maturity. What is the expected yield
on this bond if the bond is purchased for $975?
You purchased an annual interest coupon bond one year ago with six years remaining to
maturity at the time of purchase. The coupon interest rate is 10% and par value is $1,000.
At the time you purchased the bond, the yield to maturity was 8%. If you sold the bond
after receiving the first interest payment and the bond’s yield to maturity had changed to
7%, your annual total rate of return on holding the bond for that year would have been
64.
The ________ is used to calculate the present value of a bond.
65.
The yield to maturity on a bond is
A bond will sell at a discount when
67.
Consider a 5-year bond with a 10% coupon that has a present yield to maturity of 8%. If
interest rates remain constant, one year from now the price of this bond will be
A bond has a par value of $1,000, a time to maturity of 20 years, a coupon rate of 10% with
interest paid annually, a current price of $850, and a yield to maturity of 12%. Intuitively
and without using calculations, if interest payments are reinvested at 10%, the realized
compound yield on this bond must be
69.
A bond with a 12% coupon, 10 years to maturity and selling at 88:00 has a yield to maturity
of
70.
Using semi-annual compounding, a 15-year zero-coupon bond that has a par value of
$1,000, and a required return of 8% would be priced at approximately
The yield to maturity of a 20-year zero-coupon bond that is selling for $372.50 with a value
at maturity of $1,000 is
Which one of the following statements about convertibles is true?
73.
Which one of the following statements about convertibles is false?
I) The longer the call protection on a convertible, the less the security is worth.
II) The more volatile the underlying stock, the greater the value of the conversion feature.
III) The smaller the spread between the dividend yield on the stock and the yield-to–
maturity on the bond, the more the convertible is worth.
IV) The collateral that is used to secure a convertible bond is one reason convertibles are
more attractive than the underlying stock.
Consider a $1,000 par value 20-year zero-coupon bond issued at a yield to maturity of
10%. If you buy that bond when it is issued and continue to hold the bond as yields decline
to 9%, the imputed interest income for the first year of that bond is
The bond indenture includes
76.
A Treasury bond quoted at 107:16 107:18 has a bid price of _______ and an asked price of
_____.
77.
Most corporate bonds are traded
The process of retiring high-coupon debt and issuing new bonds at a lower coupon to
reduce interest payments is called
79.
Convertible bonds
TIPS are
Altman’s Z scores are assigned based on a firm’s financial characteristics and are used to
predict
82.
When a bond indenture includes a sinking fund provision,
Subordination clauses in bond indentures
Collateralized bonds
85.
Debt securities are often called fixed-income securities because
A zero-coupon bond is one that
Swingin’ Soiree, Inc. is a firm that has its main office on the Right Bank in Paris. The firm
just issued bonds with a final payment amount that depends on whether the Seine River
floods. This type of bond is known as
88.
One year ago, you purchased a newly issued TIPS bond that has a 6% coupon rate, five
years to maturity, and a par value of $1,000. The average inflation rate over the year was
4.2%. What is the amount of the coupon payment you will receive, and what is the current
face value of the bond?
Bond analysts might be more interested in a bond’s yield to call if