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Managerial Finance Quiz 2

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Question;Question 1ABC has issued a bond with the following characteristics:Par: $1,000,Time to maturity: 17 years,Coupon rate: 6%,Assume semi-annual coupon payments.Calculate the price of this bond if the YTM is 4.17%Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.1 points Question 2A discount bond has a yield to maturity that:exceeds the coupon rate.equals zero.is equal to the current yield.is less than the coupon rate.equals the bond's coupon rate.1 points Question 3Assume that you wish to purchase a 16-year bond that has a maturity value of $1,000 and a coupon interest rate of 9%, paid semiannually. If you require a 6.34% rate of return on this investment (YTM), what is the maximum price that you should be willing to pay for this bond? That is, solve for PV.Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.1 points Question 4ABC Corp. issued 15-year bonds 2 years ago at a coupon rate of 10.6%. The bonds make semi-annual payments. If these bonds currently sell for 97% of par value, what is the YTM?Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.1 points Question 5A firm's bonds have maturity of 10 years with a $1000 face value, an 8% semi-annual coupon, are callable in 5 years, at $1,050, and currently sells at a price of $1,100. What is the yield to call (YTC)?Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.1 points Question 6ABC wants to issue 10-year, zero coupon bonds that yield 9.93 percent. What price should they charge for these bonds if they have a par value of $1,000? That is, solve for PV. Assume annual compounding.Hint: zero coupon bonds means PMT = 0Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.1 points Question 7The 11.34 percent, $1,000 face value bonds of Tim McKnight, Inc., are currently selling at $986.98. What is the current yield?Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.1 points Question 8The yield to maturity on a Marshall Co. premium bond is 7.6 percent. This is the:nominal rate.effective rate.real rate.current yield.coupon rate.1 points Question 9The 10.57 percent coupon bonds of the Peterson Co. are selling for $884.85. The bonds mature in 5 years and pay interest semi-annually. These bonds have current yield of _____ percent.Enter your answer in percentages rounded off to two decimal points.1 points Question 10ABC's Inc.'s bonds currently sell for $1,280 and have a par value of $1,000. They pay a $135 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,050. What is their yield to call (YTC)?Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.1 points Question 11ABC has issued a bond with the following characteristics:Par: $1,000,Time to maturity: 8 years,Coupon rate: 7%,Assume semi-annual coupon payments.Calculate the price of this bond if the YTM is 6.5%Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.1 points Question 12The principal amount of a bond that is repaid at the end of term is called the par value or the:coupon rateface valuediscount amountback-end amountcoupon1 points Question 13The 8 percent coupon bonds of the Peterson Co. are selling for 98 percent of par value. The bonds mature in 5 years and pay interest semi-annually. These bonds have a yield to maturity of _____ percent.1 points Question 14BCD?s $1,000 par value bonds currently sell for $798.40. The coupon rate is 10%, paid semi-annually. If the bonds have 5 years to maturity, what is the yield to maturity?Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.1 points Question 15A bond which sells for less than the face value is called a:par value bond.discount bond.debenture.premium bond.perpetuity.1 points Question 16A premium bond is a bond that:has a market price which exceeds the face value.is selling for less than par value.has a face value in excess of $1,000.has a par value which exceeds the face value.is callable within 12 months or less.1 points Question 17ABC's bonds have a 9.5 percent coupon and pay interest semi-annually. Currently, the bonds are quoted at 106.315 percent of par value. The bonds mature in 8 years. What is the yield to maturity?1 points Question 18ABC has issued a bond with the following characteristics:Par: $1,000,Time to maturity: 18 years,Coupon rate: 6%,Assume annual coupon payments.Calculate the price of this bond if the YTM is 7.82%Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.1 points Question 19Stealers Wheel Software has 7.76% coupon bonds on the market with nine years to maturity. The bonds make semi-annual payments and currently sell for 91.82% of par. What is the current yield?Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.1 points Question 20ABC Inc., has $1,000 face value bonds outstanding. These bonds mature in 3 years, and have a 6.5 percent coupon. The current price is quoted at 98.59 percent of par value. Assume semi-annual payments. What is the yield to maturity?Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.1 points Question 21You paid $1,183 for a corporate bond that has a 5.38% coupon rate. What is the current yield?Hint: if nothing is mentioned, then assume par value = $1,000Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.1 points Question 22The rate required in the market on a bond is called the:yield to maturityliquidity premiumcall yieldcurrent yieldrisk premium

 

Paper#49161 | Written in 18-Jul-2015

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