Quizzes Chapter 8.pdf

Đạt 31211023422 - Nguyễn Vũ Tiến  Nhà của tôi  Các khoá học của tôi  ACF-SAT-S32023  ONLINE QUIZZES  Quizzes from Chapter 8 Bắt đầu vào lúc Monday, 16 October 2023, 11:17 PM Trạng thái Đã xong Kết thúc lúc Monday, 16 October...

Đạt 31211023422 - Nguyễn Vũ Tiến  Nhà của tôi  Các khoá học của tôi  ACF-SAT-S32023  ONLINE QUIZZES  Quizzes from Chapter 8 Bắt đầu vào lúc Monday, 16 October 2023, 11:17 PM Trạng thái Đã xong Kết thúc lúc Monday, 16 October 2023, 11:39 PM Thời gian thực hiện 22 phút 56 giây Điểm 40,00/40,00 Điểm 10,00 trên 10,00 (100%) Câu Hỏi 1 Đúng Đạt điểm 1,00 trên 1,00 A $1,000 par value bond carries a coupon rate of 6.5 percent and has a yield to maturity of 7.29 percent. The inflation rate is 3.13 percent. What is the bond's real rate of return? a. 3.86% b. 4.42% c. 3.27% d. 4.03% r = (1 +.0729) / (1 +.0313) - 1 =.0403, or 4.03% e. 3.37% The correct answer is: 4.03% Câu Hỏi 2 Đúng Đạt điểm 1,00 trên 1,00 A 12-year, 5 percent coupon bond pays interest annually. The bond has a face value of $1,000. What is the percentage change in the price of this bond if the market yield rises to 6 percent from the current level of 5.5 percent? a. 1.13% b. -5.28% c. -4.26% Price = (.05 ×$1,000) ×({1 - [1 / (1 +.055)12]} /.055) + $1,000 / (1 +.055)12 = $956.91 Price = (.05 ×$1,000) ×({1 - [1 / (1 +.06)12]} /.06) + $1,000 / (1 +.06)12 = $916.16 Percentage change in price = ($916.16 - 956.91) / $956.91 = -.0426, or -4.26% d. 4.13% e. -2.38% The correct answer is: -4.26% Câu Hỏi 3 Đúng Đạt điểm 1,00 trên 1,00 A bond is listed in a newspaper at a bid of 105.4844. This quote should be interpreted to mean: a. you can sell that bond at a price equal to 105.4844 percent of face value. Đúng b. the bond will pay annual interest payments of $105.4844 per $1,000 of face value. c. the bond will pay semiannual interest payments of $105.4844 per $1,000 of face value. d. the bond dealer is willing to sell that bond for a price equal to 105.4844 percent of par. e. you can buy that bond at a price equal to 105.4844 percent of face value. The correct answer is: you can sell that bond at a price equal to 105.4844 percent of face value. Câu Hỏi 4 Đúng Đạt điểm 1,00 trên 1,00 A bond that makes no coupon payments and is initially priced at a deep discount is called a _____ bond. a. Treasury b. zero coupon Đúng c. junk d. floating-rate e. municipal The correct answer is: zero coupon Câu Hỏi 5 Đúng Đạt điểm 1,00 trên 1,00 A bond with a coupon rate of 6 percent that pays interest semiannually and is priced at par will have a market price of _____ and interest payments in the amount of _____ each. a. $1,060; $60 b. $1,060; $30 c. $1,000; $60 d. $1,000; $30 Đúng e. $1,006; $60 The correct answer is: $1,000; $30 Câu Hỏi 6 Đúng Đạt điểm 1,00 trên 1,00 A bond with a face value of $1,000 that sells for less than $1,000 in the market is called a _____ bond. a. premium b. zero coupon c. discount Đúng d. floating rate e. par The correct answer is: discount Câu Hỏi 7 Đúng Đạt điểm 1,00 trên 1,00 A corporate bond has a coupon of 7.5 percent and pays interest annually. The face value is $1,000 and the current market price is $1,108.15. The bond matures in 14 years. What is the yield to maturity? a. 7.82% b. 8.12% c. 8.00% d. 8.04% e. 6.31% $1,108.15 = (.075 × $1,000) × ({1 - [1 / (1 + YTM)14]} / YTM) + $1,000 / (1 + YTM)14; YTM = 6.31% The correct answer is: 6.31% Câu Hỏi 8 Đúng Đạt điểm 1,00 trên 1,00 A corporate bond with a face value of $1,000 matures in 4 years and has a coupon rate of 6.25 percent. The current price of the bond is $932 and interest is paid semiannually. What is the yield to maturity? a. 6.67% b. 7.92% c. 9.05% d. 8.58% e. 8.28% $932 = [(.0625 × $1,000) / 2] × [(1 - {1 / [1 + (YTM / 2)]4 × 2}) / (YTM / 2)] + $1,000 / [1 + (YTM / 2)]4 × 2; YTM = 8.28% The correct answer is: 8.28% Câu Hỏi 9 Đúng Đạt điểm 1,00 trên 1,00 A firm offers a 10-year, zero coupon bond with a face value of $1,000. What is the current market price if the yield to maturity is 7.6 percent, given semiannual compounding? a. $835.56 b. $473.26 c. $919.12 d. $474.30 Price = $1,000 / [1 + (.076 / 2)]10 ×2 = $474.30 e. $1,088.00 The correct answer is: $474.30 Câu Hỏi 10 Đúng Đạt điểm 1,00 trên 1,00 All else constant, a bond will sell at _____ when the yield to maturity is _____ the coupon rate. a. a premium; greater than b. a discount; greater than Đúng c. at par; less than d. at par; greater than e. a premium; equal to The correct answer is: a discount; greater than Câu Hỏi 11 Đúng Đạt điểm 1,00 trên 1,00 All else constant, a coupon bond that is selling at a premium, must have: a. a yield to maturity that is less than the coupon rate. Đúng b. a coupon rate that is equal to the yield to maturity. c. a coupon rate that is less than the yield to maturity. d. a market price that is less than par value. e. semiannual interest payments. The correct answer is: a yield to maturity that is less than the coupon rate. Câu Hỏi 12 Đúng Đạt điểm 1,00 trên 1,00 All else held constant, interest rate risk will increase when the time to maturity: a. decreases or the coupon rate decreases. b. increases or the coupon rate increases. c. increases or the coupon rate decreases. Đúng d. decreases or the coupon rate increases. e. decreases and the coupon rate equals zero. The correct answer is: increases or the coupon rate decreases. Câu Hỏi 13 Đúng Đạt điểm 1,00 trên 1,00 Allison's wants to raise $12.4 million to expand its business. To accomplish this, it plans to sell 25-year, $1,000 face value, zero-coupon bonds. The bonds will be priced to yield 6.5 percent, with semiannual compounding. What is the minimum number of bonds Allison's must sell to raise the $12.4 million it needs? a. 60,435 b. 59,864 c. 60,107 d. 52,667 e. 61,366 Number of bonds = $12,400,000 / {$1,000 / [1 + (.065 / 2)]25 × 2} = 61,366 bonds The correct answer is: 61,366 Câu Hỏi 14 Đúng Đạt điểm 1,00 trên 1,00 Aspens is preparing a bond offering with a coupon rate of 5.5 percent. The bonds will be repaid in 10 years. The company plans to issue the bonds at par value and pay interest semiannually. Which one of the following statements is correct? a. The bonds will pay 19 interest payments and one principal payment. b. At issuance, the bond's yield to maturity is 5.5 percent. Đúng c. At maturity, the bonds will pay a final payment of $1,055. d. The bonds will pay ten equal coupon payments. e. The bonds will initially sell at a discount. The correct answer is: At issuance, the bond's yield to maturity is 5.5 percent. Câu Hỏi 15 Đúng Đạt điểm 1,00 trên 1,00 Chocolate and More offers a bond with a coupon rate of 6 percent, semiannual payments, and a yield to maturity of 7.73 percent. The bonds mature in 9 years. What is the market price of a $1,000 face value bond? a. $924.26 b. $1,008.16 c. $901.86 d. $963.88 e. $889.29 Bond price = [(.06 / 2) × $1,000] × [(1 - {1 / [1 + (.0773 / 2)]9 × 2}) / (.0773 / 2)] + $1,000 / [1 + (.0773 / 2)]9 × 2 = $889.29 The correct answer is: $889.29 Câu Hỏi 16 Đúng Đạt điểm 1,00 trên 1,00 Consider a bond with a coupon rate of 8 percent that pays semiannual interest and matures in eight years. The market rate of return on bonds of this risk is currently 11 percent. What is the current value of a $1,000 face value bond? a. $893.30 b. $830.58 c. $854.08 d. $929.17 e. $843.07 Bond value = [(.08 × $1,000) / 2] × [(1 - {1 / [1 + (.11 / 2)]8 ×2}) / (.11 / 2)] + $1,000 / [1 + (.11 / 2)]8 × 2 = $843.07 The correct answer is: $843.07 Câu Hỏi 17 Đúng Đạt điểm 1,00 trên 1,00 If its yield to maturity is less than its coupon rate, a bond will sell at a _____, and increases in market interest rates will: a. discount; decrease this discount. b. premium; not affect this premium. c. discount; increase this discount. d. premium; decrease this premium. Đúng e. premium; increase this premium. The correct answer is: premium; decrease this premium. Câu Hỏi 18 Đúng Đạt điểm 1,00 trên 1,00 Jackson's has $1,000 face value, zero-coupon bonds outstanding that mature in 13.5 years. What is the current value of one of these bonds if the market rate of interest is 7.6 percent? Assume semiannual compounding. a. $378.17 b. $401.12 c. $360.49 d. $365.32 Price = $1,000 / [1 + (.076 / 2)]13.5 × 2 = $365.32 e. $384.07 The correct answer is: $365.32 Câu Hỏi 19 Đúng Đạt điểm 1,00 trên 1,00 Mason's has a 5-year, 8 percent annual coupon bond with a $1,000 par value. Dixon's has a 10-year, 8 percent annual coupon bond with a $1,000 par value. Both bonds currently have a yield to maturity of 8 percent. Which one of the following statements is correct if the market rate decreases to 7 percent? a. Dixon's bond will increase in value by 4.61 percent. b. Dixon's bond will increase in value by 6.87 percent. c. Both bonds will decrease in value by 4.10 percent. d. Mason's bond will increase in Both bonds are currently priced at $1,000 because the yield to maturity value by $41. equals the bond's coupon rate. Price Mason's = (.08 × $1,000) × ({1 - [1 / (1 +.07)5]} /.07) + $1,000 / (1 +.07)5 = $1,041.00 Price Dixon's = (.08 × $1,000) × ({1 - [1 / (1 +.07)10]} /.07) + $1,000 / (1 +.07)10 = $1,070.24 Percent change in price Mason's = ($1,041.00 - 1,000) / $1,000 =.0410, or 4.10% Percent change in priceDixon's = ($1,070.24 - 1,000) / $1,000 =.0702, or 7.02% e. Mason's bond will increase in value by $52.10. The correct answer is: Mason's bond will increase in value by $41. Câu Hỏi 20 Đúng Đạt điểm 1,00 trên 1,00 Moon Lite Cafe has a semiannual, 5 percent 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 5.68%. How many years is it until this bond matures? a. 1.6 years b. 2.2 years c. 1.5 years d. 1.8 $988.52 = [(.05 / 2) × $1,000] × [(1 - {1 / [1 + (.0568 / 2)]t × 2}) / (.0568 / 2)] + $1,000 / [1 + (.0568 / years 2)]t × 2; t = 3.6 semiannual periods, or 1.8 years e. 2.1 years The correct answer is: 1.8 years Câu Hỏi 21 Đúng Đạt điểm 1,00 trên 1,00 Rosina purchased a 15-year bond at par value when it was initially issued. The bond has a coupon rate of 7 percent and matures 13 years from now. If the current market rate for this type and quality of bond is 7.5 percent, then Rosina should expect: a. the bond issuer to increase the amount of all future interest payments. b. the yield to maturity to remain constant due to the fixed coupon rate. c. the current yield today to be less than 7 percent. d. today's market price to exceed the face value of the bond. e. to realize a capital loss if she sold the bond at today's market price. Đúng The correct answer is: to realize a capital loss if she sold the bond at today's market price. Câu Hỏi 22 Đúng Đạt điểm 1,00 trên 1,00 Stu wants to earn a real return of 3.4 percent on any bond he acquires. The inflation rate is 2.8 percent. He has determined that a particular bond he is considering should have an interest rate risk premium of.27 percent, a liquidity premium of.08 percent, and a taxability premium of 1.69 percent. What nominal rate of return is Stu demanding from this particular bond? a. 8.40% b. 7.19% c. 8.24% Nominal return = 3.4% + 2.8 +.27 +.08 + 1.69 = 8.24% d. 8.74% e. 7.38% The correct answer is: 8.24% Câu Hỏi 23 Đúng Đạt điểm 1,00 trên 1,00 The _____ premium is that portion of a nominal interest rate or bond yield that represents compensation for expected future loss in purchasing power. a. taxability b. liquidity c. default risk d. interest rate risk e. inflation Đúng The correct answer is: inflation Câu Hỏi 24 Đúng Đạt điểm 1,00 trên 1,00 The _____ premium is that portion of the bond yield that represents compensation for potential difficulties that might be encountered should the bond holder wish to sell the bond prior to maturity. a. interest rate risk b. liquidity Đúng c. default risk d. taxability e. inflation The correct answer is: liquidity Câu Hỏi 25 Đúng Đạt điểm 1,00 trên 1,00 The bonds issued by Manson amp; Son bear a coupon of 6 percent, payable semiannually. The bond matures in 15 years and has a $1,000 face value. Currently, the bond sells at par. What is the yield to maturity? a. 6.17% b. 5.97% c. 6.09% d. 6.00% Since the bond is selling at par, the yield to maturity will equal the coupon rate of 6 percent. e. 5.87% The correct answer is: 6.00% Câu Hỏi 26 Đúng Đạt điểm 1,00 trên 1,00 The Fisher formula is expressed as _____ where R is the nominal rate, r is the real rate, and h is the inflation rate. a. r = R × h b. 1 + h = (1 + r) / (1 + R) c. 1 + R = (1 + r) × (1 + h) Đúng d. 1 + R = (1 + r) / (1 + h) e. R = r × h The correct answer is: 1 + R = (1 + r) × (1 + h) Câu Hỏi 27 Đúng Đạt điểm 1,00 trên 1,00 The interest paid on any municipal bond is: a. taxable at the federal level and tax exempt at the state and local level. b. free of default risk. c. subject to default risk and is exempt from state income taxation. d. free of both default risk and federal income taxation. e. exempt from federal income taxation and may or may not be exempt from state taxation. Đúng The correct answer is: exempt from federal income taxation and may or may not be exempt from state taxation. Câu Hỏi 28 Đúng Đạt điểm 1,00 trên 1,00 The interest rate for a tax-exempt bond that equates to the rate paid on a taxable bond is computed as: a. Tax-exempt rate × (1 - t *). b. Taxable rate / (1 - t *). c. Tax-exempt rate / (1 + t *). d. Taxable rate × (1 - t *). Đúng e. Taxable rate - (1 + t *). The correct answer is: Taxable rate × (1 - t *). Câu Hỏi 29 Đúng Đạt điểm 1,00 trên 1,00 The principal amount of a bond that is repaid at the end of the loan term is called the bond's: a. yield to maturity. b. maturity. c. coupon rate. d. face value. Đúng e. coupon. The correct answer is: face value. Câu Hỏi 30 Đúng Đạt điểm 1,00 trên 1,00 The rate of return required by investors in the market for owning a bond is called the: a. maturity. b. coupon. c. yield to maturity. Đúng d. coupon rate. e. face value. The correct answer is: yield to maturity. Câu Hỏi 31 Đúng Đạt điểm 1,00 trên 1,00 The relationship between nominal interest rates on default-free, pure discount securities and the time to maturity is called the: a. interest rate risk premium. b. liquidity effect. c. inflation premium. d. Fisher effect. e. term structure of interest rates. Đúng The correct answer is: term structure of interest rates. Câu Hỏi 32 Đúng Đạt điểm 1,00 trên 1,00 The relationship between nominal rates, real rates, and inflation is known as the: a. term structure of interest rates. b. Fisher effect. Đúng c. Gordon growth model. d. interest rate risk premium. e. Miller and Modigliani theorem. The correct answer is: Fisher effect. Câu Hỏi 33 Đúng Đạt điểm 1,00 trên 1,00 The specified date on which the principal amount of a bond is repaid is called the bond's: a. coupon rate. b. yield to maturity. c. maturity. Đúng d. coupon. e. face value. The correct answer is: maturity. Câu Hỏi 34 Đúng Đạt điểm 1,00 trên 1,00 The stated interest payment, in dollars, made on a bond each period is called the bond's: a. yield to maturity. b. coupon rate. c. coupon. Đúng d. face value. e. maturity. The correct answer is: coupon. Câu Hỏi 35 Đúng Đạt điểm 1,00 trên 1,00 The term structure of interest rates reflects the: a. nominal interest rate plus the interest rate risk premium. b. real rate, inflation premium, interest rate risk premium, and the liquidity premium. c. pure time value of money. Đúng d. real rate of interest plus the inflation premium. e. real rate of interest. The correct answer is: pure time value of money. Câu Hỏi 36 Đúng Đạt điểm 1,00 trên 1,00 The zero coupon bonds of Mark Enterprises have a market price of $394.47, a face value of $1,000, and a yield to maturity of 6.87 percent based on semiannual compounding. How many years is it until this bond matures? a. 12.64 years b. 10.49 years c. 15.42 years d. 11.08 years e. 13.77 years $394.47 = $1,000 / [1 + (.0687 / 2)]t ×2; t = 13.77 years The correct answer is: 13.77 years Câu Hỏi 37 Đúng Đạt điểm 1,00 trên 1,00 TJ's offers a $1,000 face value, zero coupon bond with a yield to maturity of 11.3 percent, given annual compounding. The bond matures in 16 years. What is the current price? a. $190.09 b. $180.33 Price = $1,000 / (1 +.113)16 = $180.33 c. $178.78 d. $188.36 e. $192.18 The correct answer is: $180.33 Câu Hỏi 38 Đúng Đạt điểm 1,00 trên 1,00 Westover's has an outstanding bond with a coupon rate of 5.5 percent that matures in 12 years. The bond pays interest semiannually. What is the market price of a $1,000 face value bond if the yield to maturity is 7.13 percent? a. $934.59 b. $880.86 c. $870.01 Bond price = [(.055 / 2) × $1,000] × [(1 - {1 / [1 + (.0713 / 2)]12 × 2}) / (.0713 / 2)] + $1,000 / [1 + (.0713 / 2)]12 × 2 = $870.01 d. $947.87 e. $905.92 The correct answer is: $870.01 Câu Hỏi 39 Đúng Đạt điểm 1,00 trên 1,00 What is the value of a 20-year, zero-coupon bond with a face value of $1,000 when the market required rate of return is 9.6 percent, compounded semiannually? a. $168.31 b. $195.26 c. $172.19 d. $192.40 e. $153.30 $1,000 / [1 + (.096 / 2)]20 ×2 = $153.30 The correct answer is: $153.30 Câu Hỏi 40 Đúng Đạt điểm 1,00 trên 1,00 Which one of these bonds is the most interest-rate sensitive? a. 5-year, 6 percent, annual coupon bond  b. 10-year zero coupon bond Đúng c. 10-year, 6 percent, semiannual coupon bond d. 5-year zero coupon bond e. 10-year, 6 percent, annual coupon bond The correct answer is: 10-year zero coupon bond ◄ Solution Manuals Chuyển tới... 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