QUIZ 3

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School

Central Michigan University *

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Course

670

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Finance

Date

Jan 9, 2024

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docx

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Uploaded by CoachHornet2666

QUIZ 3 An annual, ten-year bond is currently selling for $1,037.86 and has a yield to maturity of 6.23 percent. What is the coupon rate of this bond if the face value is $1,000? 6.75 percent The price you pay to purchase a Treasury bond is the _____ price. Asked A semiannual corporate bond has a face value of $1,000, a yield to maturity of 7.2 percent, and a coupon rate of 7.5 percent. The bond matures 10 years from today. This bond: has a current yield of 7.34 percent. Which one of the following bonds is the least sensitive to interest rate risk? 3-year; 5 percent coupon If a bond’s yield to maturity is less than its coupon rate, the bond will sell at a _____, and increases in market interest rates will: premium; increase this premium. A zero coupon bond has a yield to maturity of 6.33 percent and 12 years until it fully matures. What is the current price of this bond if the face value is $1,000? $478.77 TES, Inc. offers an 8.5 percent bond with a yield to maturity of 7.65 percent. The bond pays interest annually and matures in 22 years. What is the market price of one of these bonds if the face value is $1,000? $916.62 A bond with a 6% coupon that pays interest semi-annually and is priced at par will have a market price of _____ and interest payments in the amount of _____ each. $1,000; $30 Chang, Incorporated, issued bonds with an annual coupon rate of 5 percent. Coupons are paid semiannually. The bonds mature in 12 years and have a $1,000 face value. The bonds are currently selling at par. What is the yield to maturity? 5.00% Which one of the following statements is correct regarding interest rate risk? A 10-year zero coupon bond has more interest rate risk than a 10-year coupon bond. The bonds of XYZ, Inc. are currently quoted at 97.65 and mature in 13 years. The bonds pay a $45 semiannual coupon. What is the current yield on these bonds? 9.22 percent Signature Sweets, Inc. has 8 percent semiannual bonds outstanding with 15 years to maturity. The latest quote on these bonds is 109.16. What is the yield to maturity? 9.22 percent

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