The principal amount repaid at the maturity of a bond is called its Select one: a

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The principal amount repaid at the maturity of a bond is called its

Select one:

a. real interest rate.

b. face value.

c. credit risk premium

d. coupon repayment.

e. maturity value.

 

 

We are given the following information on a bond issue:

Terms

 

 Amount of issue

 $150 million

 Issue date

 3/1/2020

 Maturity date

 3/1/2043

 Face value

 $1,000

 Annual coupon

 5.25%

 Yield to maturity

 5.00%

 Coupon payment

 Semi-annual; 3/1 and 9/1

 Security

 Unsecured

What is the price on this bond?

Select one:

a. $1,133.72

b. $1,033.94

c. $1,000.00

d. $997.47

e. $903.51

 

 

Which of the following conditions will increase the interest rate risk on a bond?

                       I.         shorter time to maturity

                     II.         longer time to maturity

                    III.         lower coupon rate

                   IV.         higher coupon rate

Select one:

a. I and III

b. I and IV

c. II and III

d. II and IV

e. none of the above

 

 

XYZ Co. is planning to issue stripped bonds with a face value of $100 and maturity of 10 years. What is the price of each stripped bond if the yield to maturity on similar bonds is 5.5% compounded semi-annually?

Select one:

a. $58.13

b. $58.54

c. $76.24

d. $94.72

e. $100.00

 

Today is December 1, 2019. A bond with a coupon rate of 7.6% has an invoice price of $1,088. The issue date on the bond is May 1, 2018, and the maturity date on the bond is May 1, 2028. The bond makes semi-annual coupon payments on May 1 and November 1. What is the clean price on this bond?

Select one:

a. $1,036.50

b. $1,043.33

c. $1,070.67

d. $1,081.67

e. $1,094.33

 

The form of corporate restructuring in which a small group of investors raises loan financing to purchase all the equity shares of a public company is called

Select one:

a. a privatization.

b. a leveraged buyout.

c. an indenture.

d. a debenture.

e. a reorganization.

 

When interest rates ________, the prices of currently outstanding par-bonds ___________.

Select one:

a. rise; fall, because they are now trading at a premium

b. rise; rise, because they are now trading at a premium

c. fall; rise, because they are now trading at a discount

d. fall; remain unchanged, because their yields are fixed

e. fall; rise, because they are now trading at a premium

 

A firm has a bond issue with face value of $1,000, a 7% coupon rate, and nine years to maturity. The bond makes coupon payments every six months and is currently priced at $1,067.89. What is the yield to maturity on this bond?

Select one:

a. 5.67%

b. 6.01%

c. 7.07%

d. 7.49%

e. 14.99%

 

What is the duration of a five-year bond with a coupon rate of 7%, a yield to maturity of 8%, a semi-annual coupon payment, and a face value of $1,000?

Select one:

a. 3.80 years

b. 4.20 years

c. 4.25 years

d. 4.29 years

e. 8.51 years

The yield on a 10-year bond is 7%. The 30-day T-bill yield is 2.5%, while the inflation rate is estimated to be 2.3%. What is the real rate of return on the bond based on the exact Fisher Effect formula?

Select one:

a. 3.00%

b. 3.90%

c. 4.00%

d. 4.59%

e. 9.16%