practice exam

1. A two-year bond with $1,000 face-value and 10% coupon rate is sold for $1,000 today (Year 1).  If one year later (Year 2) the market interest rate decreases by 5%, then this bond will have a market price of $ ____ (round UP the nearest integer) next year (Year 2). 2. Using the one-period valuation model, assuming a year-end dividend of $11.00, an expected sales price of $110, and a required rate of return of 10%, the current price of the stock would be $ ________. 3. Last year you purchased a bond with an interest rate of 5 percent.  Now the interest rate on the bond market drops to 4%.  Then People can use a lower price to buy your bond today. (True or False)

You have a chance to buy a corporate bond. Here are the details: Years until maturity = 10 Annual interest income = $100/year (assume end of the year) Par value paid to you when the bond matures in 10 years = $1,000 Assume the interest is paid yearly. Market rates are currently 12% and coupon rate is 10% What is this bond's value? Group of answer choices $228.91 $ 886.99 $1,132.97 $100.00

Please show your work. What is the value of a bond with a par value of $1,000, a coupon of $120 (semi- annually), and matures in 10 years? Assume a required rate of return ( YTM) of 7.02% a. $1,198.45 b. $ 2,401.56 c. $2,568.76 d. $ 2,205.54

A firm raises capital by selling ​$10,000 worth of debt with flotation costs equal to 2​% of its par value. If the debt matures in 10 years and has an annual coupon interest rate of 11%, what is the​ bond's YTM? Question content area bottom Part 1 The​ bond's YTM is enter your response here​%. ​(Round to two decimal​ places.)

A companies corporate bond has 30 years left to maturity, a par value of $1,000, coupon rate of 7.5% with semi-annual payment, and yield to maturity (YTM) of 4.16%. Let’s assume that in 5 years, the YTM on this increases to 5.56%. What will the $price be for this bond in 5 years?

You want to find the value of a corporate bond with an annual coupon rate of 3%, making semi-annual coupon payments for 5 years, after which the bond matures, and the principal must be repaid. Assume a current YTM of 4%. (round to the nearest cent) {DO INCLUDE COMMAS OR $} Type your response Submit

I need this question completed in 10 minutes

Your company currently has $1,000 par 5.25% coupon bonds with 10 years to maturity and a price of $1,066. If you want to issue new​ 10-year coupon bonds at​ par, what coupon rate do you need to​ set? Assume that for both​ bonds, the next coupon payment is due in exactly six months.

Suppose that you purchased a Baa rated $ 1000 annual coupon bond with a 5% coupon rate and a 7-year maturity at par value. If you sold the bond two years later, and the yield on comparable debt 7.666 %, what would your capital gain (+)/loss(-) be? (Enter dollars and cents. )

The ARA Corporation bonds have a coupon of 14%, pay interest semiannually, and they will mature in 7 years. Your required rate of return for such an investment is 10% annually. Required: (a) How much should an investor pay for a $1,000 ARA Corporation bond?  (b) Discuss reasons why an investor should choose to purchase bonds over stocks given his risk profile.

1. (Bond Valuation Problem) A $1,000 par value bond with a coupon interest rate of 12.8 percent per year paid semiannually matures in 25 years. Draw a CF diagram corresponding to this information and then complete the table below by filling in the prices and YTMs that correspond to the given YTM’s and prices respectively. Show all the work for part D – both the PVAt and PV calculations. Then check your answer using your calculator’s TVM solver menu or function keys. PRICE YTM A. ______________ ___0%____ B. __$1,000______ __________ C. __$ 917.19_____ __________ D. ______________ ___16%____

Suppose your organization has issued a 30 year, 1,000,000 par-value bond with semi-annual coupons of 7%.25 years after issuance the owner of the bond offers to let your organization redeem the bond early. You can turn down the offer and redeem after 30 years. 1. Should you take the offer if:(a) the market interest rate is 6.5%(b) the market interest rate is 7.5%(c) the market interest rate is 7%(d) the market interest rate is 6.5% and redemption today requires a redemption of 1,200,000 2. What general rule for early redemption can you make?

Suppose your organization has issued a 30 year, 1,000,000 par-value bond with semi-annual coupons of 7%.25 years after issuance the owner of the bond offers to let your organization redeem the bond early. You can turn down the offer and redeem after 30 years. 1. Should you take the offer if:    the market interest rate is 6.5% 2. Should you take the offer if:    the market interest rate is 7.5% 3. Should you take the offer if:    the market interest rate is 7% 4. Should you take the offer if:    the market interest rate is 6.5% and redemption today requires a redemption of 1,200,000 5. What general rule for early redemption can you make? Sidenote: Show calculations

Last year Carson Industries issued a 10-year, 13% semiannual coupon bond at its par value of $1,000. Currently, the bond can be called in 6 years at a price of $1,065 and it sells for $1,270. What is the current yield? (Hint: Refer to Footnote 6 for the definition of the current yield and to Table 7.1) Round your answer to two decimal places.   % What is the expected capital gains (or loss) yield for the coming year? Use amounts calculated in above requirements for calculation, if required. Negative value should be indicated by a minus sign. Round your answer to two decimal places.   %

You want to find the value of a corporate bond with an annual coupon rate of 6%, making semi-annual coupon payments for 7 years, after which the bond matures, and the principal must be repaid. Assume a current YTM of 7%. (round to the nearest cent){DO INCLUDE COMMAS OR $}

A corporate bond has 30 years left to maturity, a par value of $1,000, coupon rate of 7.5% with semi-annual payment, and yield to maturity (YTM) of 4.32%. Let’s assume that in 5 years, the YTM on this increases to 5.13%. What will the $price be for this bond in 5 years?