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Pete paid $1,032 as his total cost of purchasing a bond.This price is referred to as the:


A) quoted price.
B) spread price.
C) clean price.
D) dirty price.
E) call price.

F) A) and D)
G) B) and D)

Correct Answer

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Texas Foods has a 6 percent bond issue outstanding that pays $30 in interest every March and September.The bonds are investment grade and sell at par.The bonds are callable at a price equal to the present value of all future interest and principal payments discounted at a rate equal to the comparable Treasury rate plus 0.50 percent.Which of the following correctly describe the features of this bond? I.bond rating of B II."make whole" call price III.$1,000 face value IV.offer price of $1,000


A) I and III only
B) III and IV only
C) I,III,and IV only
D) II,III,and IV only
E) I,II,III,and IV

F) B) and E)
G) B) and D)

Correct Answer

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-Bryceton,Inc.has bonds on the market with 13 years to maturity,a yield-to-maturity of 9.2 percent,and a current price of $802.30.The bonds make semiannual payments.What is the coupon rate? A) 6.56 percent B) 7.00 percent C) 7.25 percent D) 7.40 percent E) 7.65 percent -Bryceton,Inc.has bonds on the market with 13 years to maturity,a yield-to-maturity of 9.2 percent,and a current price of $802.30.The bonds make semiannual payments.What is the coupon rate? A) 6.56 percent B) 7.00 percent C) 7.25 percent D) 7.40 percent E) 7.65 percent -Bryceton,Inc.has bonds on the market with 13 years to maturity,a yield-to-maturity of 9.2 percent,and a current price of $802.30.The bonds make semiannual payments.What is the coupon rate?


A) 6.56 percent
B) 7.00 percent
C) 7.25 percent
D) 7.40 percent
E) 7.65 percent

F) C) and D)
G) A) and D)

Correct Answer

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-You want to have $1.04 million in real dollars in an account when you retire in 38 years.The nominal return on your investment is 8 percent and the inflation rate is 3.5 percent.What is the real amount you must deposit each year to achieve your goal? A) $10,667.67 B) $10,878.49 C) $11,194.39 D) $11,515.09 E) $11,744.12 -You want to have $1.04 million in real dollars in an account when you retire in 38 years.The nominal return on your investment is 8 percent and the inflation rate is 3.5 percent.What is the real amount you must deposit each year to achieve your goal? A) $10,667.67 B) $10,878.49 C) $11,194.39 D) $11,515.09 E) $11,744.12 -You want to have $1.04 million in real dollars in an account when you retire in 38 years.The nominal return on your investment is 8 percent and the inflation rate is 3.5 percent.What is the real amount you must deposit each year to achieve your goal?


A) $10,667.67
B) $10,878.49
C) $11,194.39
D) $11,515.09
E) $11,744.12

F) A) and B)
G) C) and E)

Correct Answer

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Which one of the following relationships is stated correctly?


A) The coupon rate exceeds the current yield when a bond sells at a discount.
B) The call price must equal the par value.
C) An increase in market rates increases the market price of a bond.
D) Decreasing the time to maturity increases the price of a discount bond,all else constant.
E) Increasing the coupon rate decreases the current yield,all else constant.

F) C) and E)
G) A) and B)

Correct Answer

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-You are purchasing a 20-year,zero-coupon bond.The yield to maturity is 8.68 percent and the face value is $1,000.What is the current market price? A) $106.67 B) $108.18 C) $182.80 D) $221.50 E) $228.47 -You are purchasing a 20-year,zero-coupon bond.The yield to maturity is 8.68 percent and the face value is $1,000.What is the current market price? A) $106.67 B) $108.18 C) $182.80 D) $221.50 E) $228.47 -You are purchasing a 20-year,zero-coupon bond.The yield to maturity is 8.68 percent and the face value is $1,000.What is the current market price?


A) $106.67
B) $108.18
C) $182.80
D) $221.50
E) $228.47

F) D) and E)
G) A) and E)

Correct Answer

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A bond is quoted at a price of $989.This price is referred to as which one of the following?


A) call price
B) face value
C) clean price
D) dirty price
E) wholesale price

F) B) and C)
G) B) and D)

Correct Answer

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Which one of the following rates represents the change,if any,in your purchasing power as a result of owning a bond?


A) risk-free rate
B) realized rate
C) nominal rate
D) real rate
E) current rate

F) D) and E)
G) A) and E)

Correct Answer

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