FIN5080 Quiz 4

QUESTION 1

ABC Corp. issued 15-year bonds 2 years ago at a coupon rate of 10.6%. The bonds make

semi-annual payments. If these bonds currently sell for 97% of par value, what is the

YTM?


QUESTION 2

A bond which sells for less than the face value is called a:



QUESTION 3

ABC's bonds have a 9.5 percent coupon and pay interest semi-annually. Currently, the

bonds are quoted at 106.315 percent of par value. The bonds mature in 8 years. What is

the yield to maturity?


QUESTION 4

You paid $1,016 for a corporate bond that has a 10.3% coupon rate. What is the current

yield?
Hint: if nothing is mentioned, then assume par value = $1,000


 QUESTION 5

A discount bond has a yield to maturity that:

   




QUESTION 6

ABC wants to issue 8-year, zero coupon bonds that yield 6.94 percent. What price should

they charge for these bonds if they have a par value of $1,000? That is, solve for PV.

Assume annual compounding.
Hint: zero coupon bonds means PMT = 0


QUESTION 7

ABC Inc., has $1,000 face value bonds outstanding. These bonds mature in 3 years, and

have a 6.5 percent coupon. The current price is quoted at 98.59 percent of par value.

Assume semi-annual payments. What is the yield to maturity?


QUESTION 8

The 8 percent coupon bonds of the Peterson Co. are selling for 98 percent of par value.

The bonds mature in 5 years and pay interest semi-annually. These bonds have a yield to

maturity of _____ percent.







QUESTION 9

ABC's Inc.'s bonds currently sell for $1,280 and have a par value of $1,000.  They pay a

$135 annual coupon and have a 15-year maturity, but they can be called in 5 years at

$1,050.  What is their yield to call (YTC).

QUESTION 10

    The rate required in the market on a bond is called the:



 QUESTION 11

    The yield to maturity on a Marshall Co. premium bond is 7.6 percent. This is the:



QUESTION 12

ABC has issued a bond with the following characteristics:
Par: $1,000; Time to

maturity: 11 years; Coupon rate: 10%; 
Assume annual coupon payments. Calculate the

price of this bond if the YTM is 11.4% 

QUESTION 13

The principal amount of a bond that is repaid at the end of term is called the par value or the:



 QUESTION 14

ABC has issued a bond with the following characteristics:
Par: $1,000; Time to

maturity: 8 years; Coupon rate: 7%; 
Assume semi-annual coupon payments. Calculate

the price of this bond if the YTM is 6.5%


 QUESTION 15

Stealers Wheel Software has 5.94% coupon bonds on the market with nine years to

maturity. The bonds make semi-annual payments and currently sell for 90% of par. What

is the current yield?


QUESTION 16

ABC has issued a bond with the following characteristics:
Par: $1,000; Time to

maturity: 18 years; Coupon rate: 5%; 
Assume semi-annual coupon payments. Calculate

the price of this bond if the YTM is 11.48%


QUESTION 17

A premium bond is a bond that:



QUESTION 18

Assume that you wish to purchase a 10-year bond that has a maturity value of $1,000 and

a coupon interest rate of 8%, paid semiannually. If you require a 6.11% rate of return on

this investment (YTM), what is the maximum price that you should be willing to pay for

this bond? That is, solve for PV.

QUESTION 19

The 13.44 percent, $1,000 face value bonds of Tim McKnight, Inc., are currently selling

at $1,058.31. What is the current yield?


QUESTION 20

A firm's bonds have maturity of 10 years with a $1000 face value, an 8% semi-annual

coupon, are callable in 5 years, at $1,050, and currently sells at a price of $1,100. What is

the yield to call (YTC).

QUESTION 21

The 12.91 percent coupon bonds of the Peterson Co. are selling for $841.16. The bonds

mature in 5 years and pay interest semi-annually. These bonds have current yield of

_____ percent.
 

QUESTION 22

BCD’s $1,000 par value bonds currently sell for $798.40. The coupon rate is 10%, paid

semi-annually. If the bonds have 5 years to maturity, what is the yield to maturity?

QUESTION 23

You have observed the following returns on ABC's stocks over the last five years: 


2.8%, 9.8%, 8.3%, 13.3%, 3.2%
What is the arithmetic average returns on the stock over

this five-year period.


QUESTION 24

You have observed the following returns on ABC's stocks over the last five years: 


3.8%, 9.8%, -8.4%, 11.9%, -9.8%
What is the geometric average returns on the stock

over this five-year period

QUESTION 25

You have observed the following returns on ABC's stocks over the last five years:

 2.2%, 9.1%, 8.9%, 12.9%, 6.4%
What is the geometric average returns on the stock over

 this five-year period.


QUESTION 26

Suppose the returns for Stock A for last six years was 4%, 7%, 8%, -2%, 9%, and 7%.

Compute the standard deviation of the returns.

QUESTION 27

You have observed the following returns on ABC's stocks over the last five years: 
2.1%, 9.6%, -11.4%, 12.9%, -4.2%
What is the arithmetic average returns on the stock over this five-year period.

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