FundamentalsofCorporate

ss)Chapter7 InterestRatesandBondValuationAllisonjustreceivedthesemiannualpaymentof$35onabondsheowns.Whichtermtothispayment?CouponFacevalueDiscountCallpremiumYieldBertownsabondthatwillpayhim$45eachyearininterestplus$1,000asaprincipalpaymentatmaturity.Whatisthe$1,000called?CouponFacevalueDiscountYieldDirtypriceAdiscountbond'scouponrateisequaltotheannualinterestdividedbythe:callprice.currentprice.facevalue.cleanprice.dirtyprice.Abond'sprincipalisrepaidonthe date.couponyieldmaturitydirtycleanThebondmarketrequiresareturnof9.8percentonthe5-yearbondsissuedbyJWIndustries.The9.8percentisreferredtoasthe:couponrate.facerate.callrate.yieldtomaturity.currentyield.Thecurrentyieldisdefinedastheannualinterestonabonddividedbythe:couponrate.facevalue.marketprice.callprice.parvalue.A$1,000parvaluecorporatebondthatpays$60annuallyininterestwasissuedlastyear.WhichoneofthesewouldapplytothisbondtodayifthecurrentpriceofthebondisThebondiscurrentlysellingatapremium.Thecurrentyieldexceedsthecouponrate.Thebondissellingatparvalue.Thecurrentyieldexceedstheyieldtomaturity.Thecouponratehasincreasedto7percent.Whichoneoftheseequationsappliestoabondthatcurrentlyhasamarketpricethatparvalue?Marketvalue<FacevalueYieldtomaturity=CurrentyieldMarketvalue=FacevalueCurrentyield>CouponrateYieldtomaturity<CouponrateAllelseconstant,abondwillsellat whenthecouponrateis theyieldmaturity.apremium;lessthanapremium;equaltoadiscount;lessthanadiscount;higherthanpar;lessthanDLQInc.bondsmaturein12yearsandhaveacouponrateof6percent.Ifthemarketrateinterestincreases,thenthe:couponratewillalsoincrease.currentyieldwilldecrease.yieldtomaturitywillbelessthanthecouponrate.marketpriceofthebondwilldecrease.couponpaymentwillincrease.Whichoneofthefollowingappliestoapremiumbond?Yieldtomaturity>Currentyield>CouponrateCouponrate=Currentyield=YieldtomaturityCouponrate>Yieldtomaturity>CurrentyieldCouponrate<Yieldtomaturity<CurrentyieldCouponrate>Currentyield>YieldtomaturityWhichoneofthefollowingrelationshipsappliestoaparvaluebond?Yieldtomaturity>Currentyield>CouponrateCouponrate>Yieldtomaturity>CurrentyieldCouponrate=Currentyield=YieldtomaturityCouponrate<Yieldtomaturity<CurrentyieldCouponrate>Currentyield>YieldtomaturityWhichoneofthefollowingrelationshipsisstatedcorrectly?Thecouponrateexceedsthecurrentyieldwhenabondsellsatadiscount.Thecallpricemustequaltheparvalue.Anincreaseinmarketratesincreasesthemarketpriceofabond.Decreasingthetimetomaturityincreasesthepriceofadiscountbond,allelseconstant.Increasingthecouponratedecreasesthecurrentyield,allelseconstant.RoundDotInnsispreparingabondofferingwithacouponrateof6percent,paidsemiannually,andafacevalueof$1,000.Thebondswillmaturein10yearsandwillbesoldpar.Giventhis,whichoneofthefollowingstatementsiscorrect?Thebondswillbecomediscountbondsifthemarketrateofinterestdeclines.Thebondswillpay10interestpaymentsof$60each.Thebondswillsellatapremiumifthemarketrateis5.5percent.Thebondswillinitiallysellfor$1,030each.Thefinalpaymentwillbeintheamountof$1,060.Anewlyissuedbondhasacouponrateof7percentandsemiannualinterestpayments.bondsarecurrentlypricedatpar.Theeffectiveannualrateprovidedbythesebondsmustbe:3.5percent.greaterthan3.5percentbutlessthan7percent.7percent.greaterthan7percent.lessthan3.5percent.Thepricesensitivityofabondincreasesinresponsetoachangeinthemarketrateofasthe:couponrateincreases.timetomaturitydecreases.couponratedecreasesandthetimetomaturityincreases.timetomaturityandcouponratebothdecrease.couponrateandtimetomaturitybothincrease.Whichoneofthefollowingbondsistheleastsensitivetointerestraterisk?3-year;4percentcoupon3-year;6percentcoupon5-year;6percentcoupon7-year;6percentcoupon7-year;4percentcouponAsabond'stimetomaturityincreases,thebond'ssensitivitytointerestraterisk:increasesatanincreasingrate.increasesatadecreasingrate.increasesataconstantrate.decreasesatanincreasingrate.decreasesatadecreasingrate.Youownabondthatpaysanannualcouponof6percentthatmaturesfiveyearsfromnow.Youpurchasedthis10-yearbondatparvaluewhenitwasoriginallyissued.Whichoneofthefollowingstatementsappliestothisbondiftherelevantmarketinterestrateisnow5.8Thecurrentyieldtomaturityisgreaterthan6percent.Thecurrentyieldis6percent.Thenextinterestpaymentwillbe$30.Thebondiscurrentlyvaluedatone-halfofitsissueprice.Youwillrealizeacapitalgainonthebondifyousellittoday.Youexpectinterestratestodeclineinthenearfutureeventhoughthebondmarketisnotindicatinganysignofthischange.Whichoneofthefollowingbondsshouldyoupurchasetomaximizeyourgainsiftheratedeclinedoesoccur?Short-term;lowcouponShort-term;highcouponLong-term;zerocouponLong-term;lowcouponLong-term;highcouponApremiumbondthatpays$60ininterestannuallymaturesinsevenyears.Thebondoriginallyissuedthreeyearsagoatpar.Whichoneofthefollowingstatementsisaccurateinrespecttothisbondtoday?Thefacevalueofthebondtodayisgreaterthanitwaswhenthebondwasissued.Thebondisworthlesstodaythanwhenitwasissued.Theyieldtomaturityislessthanthecouponrate.Thecouponrateislessthanthecurrentyield.Theyieldtomaturityequalsthecurrentyield.Whichoneofthesestatementsiscorrect?Mostlong-termbondissuesarereferredtoasunfundeddebt.Bondsoftenprovidetaxbenefitstoissuers.Theriskofacompanyfinanciallyfailingdecreaseswhenthecompanyissuesbonds.Allbondsaretreatedequallyinabankruptcyproceeding.Adebentureisaseniorsecureddebt.HotFoodshasaninvestment-gradebondissueoutstandingthatpays$30semiannualpayments.ThebondssellatparandarecallableatapriceequaltothepresentvalueofallfutureinterestandprincipalpaymentsdiscountedatarateequaltothecomparableTreasuryrateplus.50percent.Whichoneofthefollowingcorrectlydescribesthisbond?ThebondratingisB.Marketvalueislessthanfacevalue.Thecouponrateis3percent.Thebondhasa"makewhole"callprice.Theinterestpaymentsarevariable.Lastyear,LexingtonHomesissued$1millioninunsecured,noncallabledebt.Thisdebtanannualinterestpaymentof$55andmaturessixyearsfromnow.Thefacevalueis$1,000andthemarketpriceis$1,020.Whichoneofthesetermscorrectlydescribesafeatureofthisdebt?SemiannualcouponDiscountbondNoteTrustdeedCollateralizedCallablebondsgenerally:grantthebondholdertheoptiontocallthebondanytimeafterthedefermentperiod.arecallableatparassoonasthecall-protectionperiodends.arecalledwhenmarketinterestratesincrease.arecalledwithinthefirstthreeyearsafterissuance.haveasinkingfundprovision.Anexampleofanegativecovenantthatmightbefoundinabondindentureisastatementthatthecompany:shallmaintainacurrentratioof1.1orhigher.cannotleaseanymajorassetswithoutbondholderapproval.mustmaintaintheloancollateralingoodworkingorder.shallprovideauditedfinancialstatementsinatimelymanner.shallmaintainacashsurplusof$100,000atalltimes.Protectivecovenants:applytoshort–termdebtissuesbutnottolong–termdebtissues.onlyapplytoprivatelyissuedbonds.areafeaturefoundonlyingovernment–issuedbondindentures.onlyapplytobondsthathaveadeferredcallprovision.areprimarilydesignedtoprotectbondholders.Whichoneoftheseismostapttobeincludedinabond'sindentureoneyearafterthehasbeenissued?CurrentyieldWrittenrecordofallthecurrentbondholdersListofcollateralusedasbondsecurityCurrentmarketpricePriceatwhichabondholdercanresellabondtoanotherbondholderRoadHazardshas12-yearbondsoutstanding.Theinterestpaymentsonthesebondsaredirectlytoeachoftheindividualbondholders.Thesedirectpaymentsareaclearindicationthatthebondscanaccuratelybedefinedasbeingissued:atpar.inregisteredform.instreetform.asdebentures.ascallablebonds.Abondthatispayabletowhomeverhasphysicalpossessionofthebondissaidtobein:new–issuecondition.registeredform.bearerform.debenturestatus.collateralstatus.Jason'sPaintsjustissued20-year,7.25percent,unsecuredbondsatpar.Thesebondsfitdefinitionofwhichoneofthefollowingterms?NoteDiscountedZero–couponCallableDebentureAnoteisgenerallydefinedas:asecuredbondwithaninitialmaturityof10yearsormore.asecuredbondthatinitiallymaturesinlessthan10years.anybondsecuredbyablanketmortgage.anunsecuredbondwithaninitialmaturityof10yearsorless.anybondmaturingin10yearsormore.Asinkingfundismanagedbyatrusteeforwhichoneofthefollowingpurposes?PayingbondinterestpaymentsEarlybondredemptionConvertingbondsintoequitysecuritiesPayingpreferreddividendsReducingbondcouponratesAbondthatcanbepaidoffearlyattheissuer'sdiscretionisreferredtoasbeingwhichofbond?ParvalueCallableSeniorSubordinatedUnsecuredA$1,000facevaluebondcanberedeemedearlyattheissuer'sdiscretionfor$1,030,anyaccruedinterest.Theadditional$30iscalledthe:dirtyprice.redemptionvalue.callpremium.original–issuediscount.redemptiondiscount.Adeferredcallprovision:requiresthebondissuertopaythecurrentmarketprice,minusanyaccruedinterest,thebondbecalled.allowsthebondissuertodelayrepayingabonduntilafterthematuritydateshouldthesohibitstheissuerfromeverredeemingbondspriortohibitsthebondissuerfromredeemingcallablebondspriortoaspecifieddate.requiresthebondissuerpayacallpremiumthatisequaltoorgreaterthanoneyear'sshouldthebondbecalled.Acall–protectedbondisabondthat:isguaranteedtobecalled.canneverbecalled.iscurrentlybeingcalled.iscallableatanytime.cannotbecalledatthispointintime.Theitemsincludedinanindenturethatlimitcertainactionsoftheissuerinordertoprotectbondholder'sinterestsarereferredtoasthe:trusteerelationships.bylaws.legalbounds.trusttectivecovenants.Whichoneofthefollowingstatementsconcerningbondratingsiscorrect?InvestmentgradebondsareratedBBorhigherbyStandard&Poor's.Bondratingsassessbothinterestrateriskanddefaultrisk.Split-ratedbondsarecalledcrossoverbonds.ThehighestratingissuedbyMoody'sisAAA.A"fallenangel"isatermappliedtoall"junk"bonds.A"fallenangel"isabondthathasmovedfrom:beingpubliclytradedtobeingprivatelytraded.beingalong-termobligationtobeingashort-termobligation.beingapremiumbondtobeingadiscountbond.seniorstatustojuniorstatusforliquidationpurposes.investmentgradetospeculativegrade.BondsissuedbytheU.S.government:areconsideredtobefreeofinterestraterisk.generallyhavehighercouponsthancomparablebondsissuedbyacorporation.areconsideredtobefreeofdefaultrisk.payinterestthatisexemptfromfederalincometaxes.arecalled"munis."Treasurybondsare:issuedbyanygovernmentalagencyintheU.S.issuedonlyonthefirstdayofeachfiscalyearbytheU.S.DepartmentofTreasury.bondsthatofferthebesttaxbenefitsofanybondscurrentlyavailable.generallyissuedassemiannualcouponbonds.totallyriskfree.Municipalbonds:aretotallyriskfree.generallyhavehighercouponratesthancorporatebonds.payinterestthatisfederallytaxfree.arerarelycallable.arefreeofdefaultrisk.Thebreak-eventaxratebetweenataxablecorporatebondyielding7percentandcomparablenontaxablemunicipalbondyielding5percentcanbeexpressedas:A).05/(1?t*)=.07.B).05?(1?t*)=.07.C).07+(1?t*)=.05.D).05(1?t*)=.07.E).05(1+t*)=.07.Azerocouponbond:issoldatalargepremium.paysinterestthatistaxdeductibletotheissueratthetimeofpayment.canonlybeissuedbytheU.S.Treasury.hasmoreinterestrateriskthanacomparablecouponvidesnotaxableincometothebondholderuntilthebondmatures.Whichoneofthefollowingriskswouldafloating-ratebondtendtohavelessofastoafixed-ratecouponbond?RealrateriskInterestrateriskDefaultriskLiquidityriskTaxabilityriskThecollarofafloating-ratebondreferstotheminimumandmaximum:callperiods.maturitydates.marketprices.couponrates.yieldstomaturity.Lastyear,youpurchasedaTIPSatpar.Sincethattime,bothmarketinterestratesandtheinflationratehaveincreasedby.25percent.Yourbondhasmostlikelydonewhichoneoffollowingsincelastyear?DecreasedinvalueduetothechangeininflationratesExperiencedanincreaseinitsbondratingMaintainedafixedrealrateofreturnIncreasedinvalueinresponsetothechangeinmarketratesIncreasedinvalueduetoadecreaseintimetomaturityRecently,youdiscoveredaconvertible,callablebondwithasemiannualcouponofpercent.Ifyoupurchasethisbondyouwillhavetherightto:forcetheissuertorepurchasethebondpriortomaturity.convertthebondintoequityshares.deferalltaxableincomeuntilthebondmatures.convertthebondintoaperpetuitypaying5percent.havetheprincipalamountadjustedforinflation.Samanthaownsareverseconvertiblebond.Atmaturity,theprincipalamountwillbein:sharesofstock.cashwhiletheinterestispaidinsharesofstock.theformofanewlyissuedbond.eithersharesofstockoranewlyissuedbond.eithercashorsharesofstock.Nadineisaretiredwidowwhoisfinanciallydependentupontheinterestincomebyherbondportfolio.Whichoneofthefollowingbondsistheleastsuitableforhertoown?6-year,high-coupon,putbond5-yearTIPS10-yearAAAcouponbond5-yearfloatingratebond7-yearincomebondAlisretiredandhissolesourceofincomeishisbondportfolio.Althoughhehassufficientprincipaltoliveon,heonlywantstospendtheinterestincomeandthusisconcernedaboutpurchasingpowerofthatincome.WhichoneofthefollowingbondsshouldbesteaseAl'sconcerns?6-yearcouponbonds5-yearTIPS20-yearcouponbonds5-yearmunicipalbonds7-yearincomebondsKurthasresearchedT-Tekandbelievesthefirmispoisedtovastlyincreaseinvalue.HedecidedtopurchaseT-Tekbondsasheneedsasteadystreamofincome.However,hestillwishesthathecouldshareinthefirm'ssuccessalongwiththeshareholders.Whichoneofthefollowingbondfeatureswillhelphimfulfillhiswish?PutprovisionPositivecovenantWarrantCrossoverratingCallprovisionAbondthathasonlyonepayment,whichoccursatmaturity,defineswhichoneoftypesofbonds?DebentureCallableFloating-rateJunkZerocouponAhighlyilliquidbondthatpaysnointerestbutmightentitleitsholdertorentalincomeanassetismostapttobea:NoNobond.putbond.contingentcallablebond.structurednote.sukuk.Whichoneofthefollowingisthepriceatwhichadealerwillsellabond?CallpriceAskedpriceBidpriceBid–askspreadParvalueIfyousellabondwithacouponof6percenttoadealerwhenthemarketrateis7whichoneofthefollowingpriceswillyoureceive?CallpriceParvalueBidpriceAskedpriceBid–askspreadThedifferencebetweenthepricethatadealeriswillingtopayandthepriceatwhichheshewillselliscalledthe:equilibrium.premium.discount.callprice.spread.Abondisquotedatapriceof$1,011.Thispriceisreferredtoasthe:callprice.facevalue.cleanprice.dirtyprice.maturityprice.Rositapaidatotalof$1,189,includingaccruedinterest,topurchaseabondthathas7ofinitial20yearsleftuntilmaturity.Thispriceisreferredtoasthe:quotedprice.spreadprice.cleanprice.dirtyprice.callprice.U.S.Treasurybonds:arehighlyilliquid.arequotedasapercentageofpar.arequotedatthedirtyprice.payinterestthatisfederallytax-exempt.mustbehelduntilmaturity.Asix-year,$1,000facevaluebondissuedbyTaylorToolspaysinterestsemiannuallyFebruary1andAugust1.AssumetodayisOctober1.Whatwillbethedifference,ifany,betweenthisbond'scleananddirtypricestoday?NodifferenceOnemonths'interestTwomonths'interestFourmonths'interestFivemonths'interestToday,June15,youwanttobuyabondwithaquotedpriceof98.64.ThebondpaysonJanuary1andJuly1.Whichoneofthefollowingpricesrepresentsyourtotalcostofpurchasingthisbondtoday?CleanpriceDirtypriceAskedpriceQuotedpriceBidpriceWhichoneofthefollowingratesrepresentsthechange,ifany,inyourpurchasingpowerasresultofowningabond?Risk-freerateRealizedrateNominalrateRealrateCurrentrateWhichoneofthefollowingstatementsiscorrect?Therisk-freeraterepresentsthechangeinpurchasingpower.Anyreturngreaterthantheinflationraterepresentstheriskpremium.Historicalrealratesofreturnmustbepositive.Nominalratesexceedrealratesbytheamountoftherisk-freerate.Therealratemustbelessthanthenominalrategivenapositiverateofinflation.TheFishereffectprimarilyemphasizestheeffectsof onaninvestor'sratereturn.defaultmarketmovementsinterestratechangesinflationthetimetomaturityYouaretryingtocomparethepresentvaluesoftwoseparatestreamsofcashflowsthatequivalentrisks.Onestreamisexpressedinnominalvaluesandtheotherstreamisexpressedinrealvalues.Youdecidetodiscountthenominalcashflowsusinganominalannualrateof8percent.Whatrateshouldyouusetodiscounttherealcashflows?8percentEARof8percentcompoundedmonthlyComparablerisk-freerateComparablerealrateNominalrateminustherisk-freerateRealratesaredefinedasnominalratesthathavebeenadjustedforwhichofthefollowing?InflationDefaultriskAccruedinterestInterestrateriskBothinflationandinterestrateriskInterestratesthatincludeaninflationpremiumarereferredtoas:annualpercentagerates.strippedrates.effectiveannualrates.realrates.nominalrates.TheFishereffectisdefinedastherelationshipbetweenwhichofthefollowingvariables?Defaultriskpremium,inflationriskpremium,andrealratesNominalrates,realrates,andinterestrateriskpremiumInterestrateriskpremium,realrates,anddefaultriskpremiumRealrates,inflationrates,andnominalratesRealrates,interestrateriskpremium,andnominalratesThepuretimevalueofmoneyisknownasthe:liquidityeffect.Fishereffect.termstructureofinterestrates.inflationerestratefactor.Whichoneofthefollowingpremiumsiscompensationforthepossibilitythatabondmaynotpayabond'sinterestorprincipalpaymentsasexpected?DefaultriskTaxabilityLiquidityInflationInterestrateriskTheinterestrateriskpremiumisthe:additionalcompensationpaidtoinvestorstooffsetrisingpensationinvestorsdemandforacceptinginterestraterisk.differencebetweentheyieldtomaturityandthecurrentyield.differencebetweenthemarketinterestrateandthecouponrate.differencebetweenthecouponrateandthecurrentyield.ATreasuryyieldcurveplotsTreasuryinterestratesrelativeto:marketparablecorporatebondrates.therisk-freerate.inflationrates.timetomaturity.Whichoneofthefollowingriskpremiumscompensatesfortheinabilitytoeasilyresellbondpriortomaturity?DefaultriskTaxabilityLiquidityInflationInterestrateriskThetaxabilityriskpremiumcompensatesbondholdersforwhichoneofthefollowing?YielddecreasesinresponsetomarketchangesLackofcouponpaymentsPossibilityofdefaultAbond'sunfavorabletaxstatusDecreaseinamunicipality'screditratingWhichbondwouldyougenerallyexpecttohavethehighestyield?Risk-freeTreasurybondNontaxable,highlyliquidbondLong-term,high-quality,tax-freebondShort-term,inflation-adjustedbondLong-term,taxablejunkbondWhichoneofthefollowingstatementsisthetermstructureofinterestrates?Expectationsoflowerinflationratesinthefuturetendtolowertheslopeofthetermstructureofinterestrates.Thetermstructureofinterestratesincludesbothaninflationpremiumandaninterestratepremium.Thetermstructureofinterestratesandthetimetomaturityarealwaysdirectlyrelated.Therealrateofreturnhasminimal,ifany,effectontheslopeofthetermstructureofrates.Theinterestrateriskpremiumincreasesasthetimetomaturityincreases.TheyieldsonacorporatebonddifferfromthoseonacomparableTreasuryprimarilybecauseof:interestrateriskandtaxes.taxesanddefaultrisk.defaultandinterestraterisks.liquidityandinflationraterisks.default,inflation,andinterestraterisks.The7percentbondsissuedbyModernKitchenspayinterestsemiannually,matureinyears,andhavea$1,000facevalue.Currently,thebondssellfor$987.Whatistheyieldtomaturity?6.97percent6.92percent6.88percent7.22percent7.43percentYouownabondthatpays$64ininterestannually.Thefacevalueis$1,000andthemarketpriceis$1,021.61.Thebondmaturesin11years.Whatistheyieldtomaturity?6.12percent6.22percent6.46percent6.71percent5.80percentNewHomeshasabondissuewithacouponrateof5.5percentthatmaturesin8.5years.bondshaveaparvalueof$1,000andamarketpriceof$1,022.Interestispaidsemiannually.Whatistheyieldtomaturity?6.36percent6.42percent5.61percent5.74percent5.18percentOilWellsoffers5.65percentcouponbondswithsemiannualpaymentsandayieldtomaturityof6.94percent.Thebondsmatureinsevenyears.Whatisthemarketpriceperbondthefacevalueis$1,000?A)$949.70B)$929.42C)$936.48D)$902.60E)$913.48RoadsideMarketshas8.45percentcouponbondsoutstandingthatmaturein10.5years.bondspayinterestsemiannually.Whatisthemarketpriceperbondifthefacevalueis$1,000andtheyieldtomaturityis7.2percent?A)$1,199.80B)$999.85C)$903.42D)$1,091.00E)$1,007.52LuxuryPropertiesoffersbondswithacouponrateof8.8percentpaidsemiannually.Theyieldtomaturityis11.2percentandthematuritydateis11yearsfromtoday.Whatisthepriceofthisbondifthefacevalueis$1,000?A)$850.34B)$896.67C)$841.20D)$846.18E)$863.30RedesignedComputershas6.5percentcouponbondsoutstandingwithacurrentmarketof$548.Theyieldtomaturityis13.2percentandthefacevalueis$1,000.Interestispaidannually.Howmanyyearsisituntilthesebondsmature?17.84years14.19years17.41years16.16years18.32yearsWorldTravelhas7percent,semiannual,couponbondsoutstandingwithacurrentpriceof$1,023.46,aparvalueof$1,000,andayieldtomaturityof6.72percent.Howmanyyearsisituntilthesebondsmature?12.26years12.53years18.49years24.37years25.05yearsA13-year,6percentcouponbondpaysinterestsemiannually.Thebondhasafacevalueof$1,000.Whatisthepercentagechangeinthepriceofthisbondifthemarketyieldtomaturityrisesto5.7percentfromthecurrentrateof5.5percent??1.79percent?1.38percent?1.64percent1.79percentTheCornerGrocerhasa7-year,6.5percentsemiannualcouponbondoutstandingwitha$1,000parvalue.Thebondhasayieldtomaturityof5.5percent.Whichoneofthefollowingstatementsiscorrectifthemarketyieldsuddenlyincreasesto7.25percent?Thebondpricewilldecreaseby9.27percent.Thebondpricewillincreaseby7.04percent.Thebondpricewilldecreaseby8.64percent.Thebondpricewillincreaseby7.16percent.Thebondpricewillincreaseby3.86percent.Do-Wellbondshaveafacevalueof$1,000andarecurrentlyquotedat867.25.Thehavecouponrateof6.5percent.Whatisthecurrentyieldonthesebonds?7.45percent7.67percent7.49percent8.03percent8.47percentThe$1,000parvaluebondsofUptownTourshaveacouponrateof6.5andacurrentquoteof101.23.Whatisthecurrentyield?6.60percent6.37percent6.42percent6.49percent6.58percentA$10,000facevalueTreasurybondisquotedatapriceof101.6533withacurrentyieldof4.87percent.Whatisthecouponrate?5.20percent4.48percent5.41percent4.95percent4.27percentAcorporatebondisquotedatapriceof98.96andhasacouponrateof4.8percent,semiannually.Whatisthecurrentyield?4.24percent4.85percent5.36percent5.62percent4.66percentTheyieldtomaturityonabondistheinterestrateyouearnonyourinvestmentifinterestratesdonotchange.Ifyouactuallysellthebondbeforeitmatures,yourrealizedreturnisastheholdingperiodyield.Supposethattodayyoubuyacouponbondwith9percentannualinterestfor$1,000.Thebondhas12yearstomaturity.Threeyearsfromnow,theyieldtomaturityhasdeclinedto7percentandyoudecidetosell.Whatisyourholdingperiodyield?8.84percent9.49percent10.96percent13.01percent12.83percentA3.25percentTreasurybondisquotedatapriceof99.04.Thebondpayssemiannually.Whatisthecurrentyield?2.94percent2.99percent3.28percent3.33percent3.23percentThesemiannual,8-yearbondsofAltoMusicaresellingatparandhaveaneffectiveyieldof8.6285percent.Whatistheamountofeachinterestpaymentifthefacevalueofthebondsis$1,000?A)$41.50B)$42.25C)$43.15D)$85.00E)$86.29A$1,000facevaluebondhasacouponrateof7percent,amarketpriceof$989.40,and10yearslefttomaturity.Interestispaidsemiannually.Iftheinflationrateis2.2percent,whatisyieldtomaturitywhenexpressedinrealterms?5.03percent4.68percent4.92percent4.84percent5.68percentKaiserIndustrieshasbondsonthemarketmakingannualpayments,with14yearstomaturity,aparvalueof$1,000,andacurrentpriceof$1,108.60.Atthisprice,thebonds7.5percent.Whatisthecouponrate?8.93percent8.46percent9.01percent9.32percent8.78percentDexterMillsissued20-yearbondsoneyearagoatacouponrateof10.2percent.Themakesemiannualpaymentsandhaveaparvalueof$1,000.IftheYTMis8.2percent,whatisthecurrentbondprice?A)$985.55B)$991.90C)$1,142.16D)$1,190.93E)$1,098.00Abondhasacouponrateof8percent,7yearstomaturity,semiannualinterestpayments,andaYTMof7percent.Ifinterestratessuddenlyriseby1.5percent,whatwillbethepercentagechangeinthebondprice??8.16percent?8.87percent?7.56percent?7.64percent?8.67percentSunsetSaleshas6.8percentcouponbondsonthemarketwith11years