Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
104) Wheeler's has bonds on the market with 13 years to maturity, a YTM of 7.6 percent, and a
current price of $901.98. The bonds make semiannual payments and have a face value of $1,000.
What is the coupon rate?
A) 6.40 percent
B) 6.33 percent
C) 6.60 percent
D) 6.67 percent
E) 6.50 percent
105) The 7 percent, semiannual coupon bonds offered by House Renovators are callable in two
years at $1,035. What is the amount of the call premium if the bonds have a par value of $1,000?
A) $42
B) $35
C) $70
D) $67
E) $105
106) You are purchasing a 15-year, zero–coupon bond. The yield to maturity is 6.85 percent and
the face value is $1,000. What is the current market price? Assume semiannual compounding.
A) $406.67
B) $408.18
C) $364.11
D) $321.50
E) $358.47
107) Today, you want to sell a $1,000 face value zero coupon bond you currently own. The bond
matures in 3.5 years. How much will you receive for your bond if the market yield to maturity is
currently 6.19 percent? Ignore any accrued interest. Assume semiannual compounding.
A) $896.60
B) $798.09
C) $741.08
D) $756.14
E) $807.86
108) A newly issued 10-year, $1,000, zero coupon bond just sold for $311.05. What is the
implicit interest, in dollars, for the first year of the bond's life? Assume semiannual
compounding.
A) $47.72
B) $38.53
C) $41.47
D) $57.63
E) $45.89
109) Global Exporters wants to raise $31.3 million to expand its business. To accomplish this, it
plans to sell 15-year, $1,000 face value, zero coupon bonds. The bonds will be priced to yield
5.75 percent. What is the minimum number of bonds it must sell to raise the money it needs?
Assume semiannual compounding.
A) 80,411
B) 69,800
C) 74,907
D) 86,029
E) 73,225
110) The zero coupon bonds of JK Industries have a market price of $318.46, a face value of
$1,000, and a yield to maturity of 6.69 percent. How many years is it until these bonds mature?
Assume semiannual compounding.
A) 34.78 years
B) 32.28 years
C) 17.39 years
D) 24.01 years
E) 16.14 years
111) A corporate bond was quoted yesterday at 102.16 while today's quote is 102.19. What is the
change in the value of a bond that has a face value of $3,000?
A) $.30
B) $.90
C) $3.00
D) $.09
E) $.03
112) The 4.5 percent, semiannual coupon bond issued by Tyler Rentals has a $1,000 face value
and matures in 12 years. The bond is currently quoted at 98.7. What is the clean price of this
bond if the next interest payment will occur 4 months from today?
A) $987.00
B) $994.50
C) $1,002.00
D) $1,011.25
E) $1,022.50
113) A Treasury bond is quoted at a price of 101.4621. What is the market price of this bond if
the face value is $5,000?
A) $5,005.46
B) $5,105.46
C) $5,073.11
D) $5,264.44
E) $5,215.00
114) A Treasury bond is quoted as 99.6325 asked and 99.1250 bid. What is the bid-ask spread in
dollars on a $10,000 face value bond?
A) $25.38
B) $5.75
C) $5.08
D) $50.75
E) $2.54
115) You purchase a bond with an invoice price of $1,119. The bond has a coupon rate of 6.25
percent, a face value of $1,000, and there are four months to the next semiannual coupon date.
What is the clean price of this bond?
A) $1,108.58
B) $1,052.17
C) $1,114.14
D) $1,087.75
E) $1,083.50
116) A bond that pays interest annually yielded 7.37 percent last year. The inflation rate for the
same period was 2.4 percent. What was the actual real rate of return?
A) 4.19 percent
B) 4.25 percent
C) 4.85 percent
D) 4.41 percent
E) 4.49 percent
117) A bond has a yield to maturity of 8.97 percent. If the inflation rate is 1.2 percent, what is the
real rate of return on the bond?
A) 8.97 percent
B) 7.90 percent
C) 7.57 percent
D) 7.68 percent
E) 7.95 percent
118) The outstanding bonds of Winter Tires Inc. provide a real rate of return of 3.6 percent. If
the current rate of inflation is 2.68 percent, what is the actual nominal rate of return on these
bonds?
A) 7.58 percent
B) 7.33 percent
C) 7.71 percent
D) 6.76 percent
E) 6.38 percent
119) The yield to maturity on a bond is currently 8.76 percent. The real rate of return is 4.48
percent. What is the rate of inflation?
A) 4.10 percent
B) 5.64 percent
C) 7.24 percent
D) 12.04 percent
E) 13.63 percent
120) You will receive $5,000 a year in real terms for the next 5 years. Each payment will be
received at the end of the period with the first payment occurring one year from today. The
relevant nominal discount rate is 9.625 percent and the inflation rate is 2.3 percent. What are
your winnings worth today in real dollars?
A) $20,413
B) $19,367
C) $20,781
D) $21,500
E) $19,137
121) You purchased an investment that will pay you $8,000, in real dollars, a year for the next
three years. Each payment will be received at the end of the period with the first payment
occurring one year from today. The nominal discount rate is 8.46 percent and the inflation rate is
3.1 percent. What is the present value of these payments in real dollars?
A) $20,720
B) $21,705
C) $20,447
D) $18,811
E) $18,529
122) Suppose the real rate is 3.45 percent and the inflation rate is 2.2 percent. What rate would
you expect to earn on a Treasury bill?
A) 1.25 percent
B) 3.30 percent
C) 5.73 percent
D) 6.56 percent
E) 7.75 percent
123) An investment offers a total return of 13.8 percent over the coming year. You believe the
total real return will be only 9.4 percent. What do you believe the exact inflation rate will be for
the next year?
A) 3.52 percent
B) 3.67 percent
C) 4.02 percent
D) 3.89 percent
E) 4.14 percent
124) You want to have $2 million in real dollars in an account when you retire in 35 years. The
nominal return on your investment is 9.94 percent and the inflation rate is 3.2 percent. What is
the real amount you must deposit each year to achieve your goal?
A) $20,403
B) $7,482
C) $16,017
D) $18,887
E) $19,711
