1. The interest rate is 10% and you borrow a $2000, 2-year fixed payments car loan with two annual payments.  Then your loan payment each year is? $1000 $1152.40 $1476.25 $1045.30          2. Last year you purchased a bond with an interest rate of 5 percent.  Now the interest rate on the bond market increases to 6%.  Then which of the following are correct?  (there are more than one answer)   The interest rate you are earning from this bond is higher.   The face value of your bond is lower.   You will receive the same amount of coupon payments from the issuer while you are holding the bond.   Your return on this bond will be higher later when you hold it to the maturity date.   The market price of your bond is lower today.   You can sell your bond at today's market for a higher price.   3. If a security pays $110 next year and $121 the year after that, then what is its yield to maturity if it sells for $210? 10 percent more than 10 percent less than 10 percent $20

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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1. The interest rate is 10% and you borrow a $2000, 2-year fixed payments car loan with two annual payments.  Then your loan payment each year is?

$1000

$1152.40

$1476.25

$1045.30       

 

2. Last year you purchased a bond with an interest rate of 5 percent.  Now the interest rate on the bond market increases to 6%.  Then which of the following are correct?  (there are more than one answer)

 

The interest rate you are earning from this bond is higher.

 

The face value of your bond is lower.

 

You will receive the same amount of coupon payments from the issuer while you are holding the bond.

 

Your return on this bond will be higher later when you hold it to the maturity date.

 

The market price of your bond is lower today.

 

You can sell your bond at today's market for a higher price.

 

3. If a security pays $110 next year and $121 the year after that, then what is its yield to maturity if it sells for $210?

10 percent

more than 10 percent

less than 10 percent

$20

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