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Exam 7: Interest Rates and Bond Valuation

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Question 61

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Elaborate on what do CCC/CC/C credit ratings signifies.

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CCC/CC/C may signify very highly specula...

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Question 62

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A corporate bond is quoted at a price of 96.48 and carries a 5.75% coupon. The bond pays interest semiannually. What is the current yield on one of these bonds?

A) 5.87%
B) 5.91%
C) 5.96%
D) 6.03%
E) 6.08%

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Question 63

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High Noon Sun, Inc. has a 5%, semi-annual coupon bond with a current market price of $988.52. The bond has a par value of $1,000 and a yield to maturity of 5.29%. How many years is it until this Bond matures?

The call premium is:

Westover Ridge offers a 9% coupon bond with semiannual payments and a yield to maturity of 11.68%. The bonds mature in 16 years. What is the market price per bond if the face value is $1,000?

On this trading day, the Imperial Oil bond is:

Your neighbour is bragging that the coupon payment on the bonds he bought five years ago has increased in each of the last three years. You know he must own _______________.

Which of the following items does NOT generally appear in The National Post corporate bond quote?

Provide an appropriate definition of a nominal rate.

A zero coupon bond with a face value of $1,000 is issued with an initial price of $387.50. The bond matures in 30 years. What is the implicit interest, in dollars, for the first year of the bond's life?

A bond with a 7% coupon that pays interest semi-annually and is priced at par will have a market price of _____ and interest payments in the amount of _____ each.

As the yield to maturity increases, the:

The bonds of Microhard, Inc. carry a 10% annual coupon, have a $1,000 face value, and mature in four years. Bonds of equivalent risk yield 15%. Microhard is having cash flow problems and has Asked its bondholders to accept the following deal: The firm would like to make the next three Coupon payments at half the scheduled amount, and make the final coupon payment be $250. If This plan is implemented, the market price of the bond will (rise/fall) to ___________. (Continue to Assume a 15% required return.)

The zero coupon bonds of Casper, Inc., have a market price of $267.80, a face value of $1,000, and a yield to maturity of 8.87%. How many years is it until these bonds mature?

Ajax Corporation issued 10,000 units of $1,000 face value bonds that mature in 20 years and have a 4% coupon rate that is paid semi-annually. If the bonds were sold at 103.5% of their face value, Calculate the yield to maturity at the end of year 8.

Provide an appropriate definition of coupon rate.

Blackwater Industries just issued 12-year, 7% coupon bonds. Freshwater Enterprises just issued 12- year, 6% coupon bonds. Both bonds sold at par. Which one of the following statements is correct Concerning these two bonds?

Which one of the following is designed to benefit the corporation rather than the bondholder?

Culpepper Supply has a bond issue outstanding that pays a 7.5% coupon and matures in 14 years. The bonds have a par value of $1,000 and a market price of $942.90. Interest is paid semiannually. What is the yield to maturity?

A bond with face value $1,000 that sells for more than $1,000 in the market is called a: