Bond Valuation

Question 2

We are given the following information on a bond issue:

Amount of issue $150 million

Issue date 3/1/2016

Maturity date 3/1/2041

Face value $1,000

Annual coupon 5.25%

Yield to maturity 6.00%

Coupon payment Semi-annual; 3/1 and 9/1

Security Unsecured

What is the price on this bond?

Select one:

a. $1,103.75

b. $1,000.00

c. $997.47

d. $904.12

e. $903.51

Question 5

Today is August 1, 2017. A bond with a coupon rate of 8.2% has an invoice price of $1,057. The issue date on the bond is May 1, 2016, and the maturity date on the bond is May 1, 2026. The bond makes semi-annual coupon payments on May 1 and November 1. What is the clean price on this bond?

Select one:

a. $1,002.33

b. $1,036.50

c. $1,043.33

d. $1,070.67

e. $1,084.33

Question 8

A firm has a bond issue with face value of $1,000, 8% coupon rate, and eight years to maturity. The bond makes coupon payments every six months, and is currently priced at $1,055.85. What is the yield to maturity on this bond?

Select one:

a. 3.54%

b. 6.95%

c. 7.07%

d. 7.49%

e. 14.99%

Question 9

What is the duration of a five-year bond with coupon rate of 8%, yield to maturity of 6%, semi-annual coupon payment, and face value of $1,000?

Select one:

a. 3.80 years

b. 3.95 years

c. 4.20 years

d. 4.25 years

e. 8.51 years

Question 10

The yield on a 10-year bond is 6.5%. The 30-day T-bill yield is 3.5%, while the inflation rate is estimated to be 2.5%. 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. 6.50%

e. 9.16%

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