Cf 6 Q

Front 1

the coupon rate of a bond equals

Back 1

a defined percentage of its face value

Front 2

periodic receipts of interest by the bondholder are known as

Back 2

coupon payments

Front 3

as the coupon rate of a bond increases, the bonds

Back 3

interest payments increase

Front 4

assume a bond is currently selling at par value. what will happen if the bonds expected cash flows are discounted at a rate lower than the bonds coupon rate

Back 4

the price of the bond will increase

Front 5

when an investor purchases a 1,00 par value bond that was quoted at 97.162 the investor

Back 5

pays 97.162% of face value for the bond

Front 6

how much does the 1,000 to be received upon a bonds maturity in 4 years add to the bonds price if the appropriate discount rate is 6%

Back 6

792.09

1,000/1.06^4

Front 7

what happens to a discount bond as the time to maturity decreases

Back 7

the bond price increases

Front 8

how much should you pay for a 1,000 bond with 10% coupon, annual payments, and 5 years to maturity if the interest rate is 12%?

Back 8

927.90

Front 9

how much would an investor expect to pay for a 1,000 par value bond with a 9% annual coupon that matures in 5 years if the interest rate is 7%

Back 9

1082.00

Front 10

which of the following statements is correct for a 10% coupon bond that has a current yield of 7%

Back 10

the bonds maturity value is lower than the bonds price

Front 11

if an investor purchases a bond when its current yield is higher than the coupon rate, then the bonds price will be expected to

Back 11

increase over time, reaching par value at maturity

Front 12

the current yield of a bond can be calculated by

Back 12

dividing the annual coupon payment by the price

Front 13

what is the current yield of a bond with a 6% coupon, 4 years until maturity, and a price quote of 84

Back 13

7.14

Front 14

a bonds par value can also be called its

Back 14

face value

Front 15

how does a bond dealer generate profits when trading bonds

Back 15

by maintaining bid prices lower than ask prices

Front 16

the discount rate that makes the present value of a bonds payments equal to its price is termed the

Back 16

yield to maturity

Front 17

what is the coupon rate for a bond with 3 years until maturity, a price of 1,053.45 and a yield to maturity of 6%? interest is paid annually

Back 17

8%

Front 18

what is the yield to maturity for a bond paying 100 annually that has 6 years until maturity and sells for 1,000

Back 18

10%

Front 19

consider a 3 year bond with a par value of 1,000 and an 8% annual coupon. if interest rates change form 8 to 6% the bonds price will

Back 19

increase by 53.46

Front 20

which one of the following bond values will change when interest rates change

Back 20

the present value

Front 21

what happens to the coupon rate of a 1,000 face value bond that pays 80 annual in interest if market interest rates change from 9 to 10%

Back 21

the coupon rate remains at 8%

Front 22

which one of the following is fixed for the life of a given bond

Back 22

coupon rate

Front 23

what is the rate of return for an investor who pays 1054.57 for a 3 year bond with a coupon of 6.5% and sells the bond 1 year late for 1037.19

Back 23

4.53

Front 24

if a bond investors rate of return for a particular period equaled the bonds coupon rate, then during that period, the bonds price

Back 24

remained constant

Front 25

what is the relationship between a bondholders rate of return and the bonds yield to maturity if he does not hold the bond until it matures

Back 25

there is no predetermined relationship between the rate of return and the yield to maturity