Professional Documents
Culture Documents
Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
2) What is the annual interest divided by the market price of a bond called? 2)
A) effective annual yield
B) yield to market
C) current yield
D) yield to maturity
E) coupon rate
5) A discount bond: 5)
A) has a par value that is less than $1,000.
B) pays a variable coupon payment.
C) has a duration that is less than that required by an investor.
D) has a market price in excess of face value.
E) has a face value that exceeds the market value.
1
6) The price of a bond, net of accrued interest, is referred to as the bond's: 6)
A) discount value.
B) maturity value.
C) clean price.
D) par value.
E) dirty price.
8) A callable bond: 8)
A) can be paid off early at either the issuer's or the bondholder's request.
B) can be redeemed early if the bondholder so requests.
C) can have its maturity date extended by the issuer.
D) is a bond that pays a variable interest payment.
E) can be redeemed by the issuer prior to maturity.
9) Which one of the following does an issuer pay to redeem a bond prior to maturity? 9)
A) par value
B) discounted price
C) call price
D) put price
E) face value
10) Which one of the following prices is equal to the present value of a bond's future cash 10)
flows and is paid when a bond is redeemed prior to maturity?
A) make-whole call
B) tender-offer
C) face value
D) deferred
E) call protected
11) An issuer has a bond outstanding that matures in 18 years. Which one of the following 11)
prevents the issuer from buying back that bond today?
A) put provision
B) call protection period
C) call premium
D) newly issued provision
E) make-whole provision
2
12) The yield that a bond will earn given that it is bought back by the issuer at the earliest 12)
possible date is the:
A) market yield.
B) yield to maturity.
C) yield to put.
D) yield to call.
E) current yield.
13) Which one of the following is the risk that market rates may increase causing the price 13)
of a bond to decline?
A) inflation risk
B) default risk
C) interest rate risk
D) reinvestment risk
E) yield risk
14) The rate of return an investor actually earns from owning a bond is called which one of 14)
the following?
A) call yield
B) market return
C) maturity yield
D) realized yield
E) annualized coupon yield
15) Which one of the following measures a bond's sensitivity to changes in market interest 15)
rates?
A) yield to call
B) yield to market
C) immunization
D) target date valuation
E) duration
16) A change in a bond's price caused by which one of the following is defined as the dollar 16)
value of an 01?
A) change in yield to maturity of one basis point
B) change in yield to maturity of one percent
C) change in yield to call due to passage of one year
D) change in coupon rate of one percent
E) change in coupon rate of one basis point
3
17) The yield value of a 32nd is the change needed in which one of the following to cause a 17)
bond's price to change by 1/32nd?
A) call premium
B) call date
C) yield to maturity
D) coupon rate
E) current yield
19) Which one of the following risks is associated with investing a coupon payment at a rate 19)
that is lower than the bond's yield-to-maturity?
A) current rate risk
B) current yield risk
C) payment risk
D) reinvestment rate risk
E) maturity risk
20) Which one of the following involves creating a portfolio in a manner which minimizes 20)
the uncertainty of the portfolio's maturity target date value?
A) reinvestment
B) modification
C) immunization
D) duration
E) call protection
4
22) Periodically rebalancing a portfolio so that the duration continues to match the target 22)
date is called:
A) duration testing.
B) dedication matching.
C) risk assessment.
D) portfolio matching.
E) dynamic immunization.
23) A basic bond that has a face value of $1,000 and pays regular semiannual coupon 23)
payments is referred to as which one of the following?
A) straight bond
B) premium bond
C) pure discount bond
D) conversion bond
E) inflation bond
24) Which of the following will increase if the coupon rate increases? 24)
I. face value
II. market value
III. yield-to-maturity
IV. current yield
A) III and IV only
B) I and II only
C) I, II, and III only
D) I, II, III, and IV
E) II, III, and IV only
25) Which one of the following will decrease the current yield of a bond? 25)
A) decrease in the coupon rate
B) increase in the face value
C) decrease in the call premium
D) change from semi-annual to annual coupon payments
E) decrease in the bond price
26) Which one of the following will occur if a bond's discount rate is lowered? 26)
A) coupon rate will decrease
B) current yield will increase
C) call premium will increase
D) coupon payment amount will decrease
E) market price will increase
5
27) Which one of the following statements is correct concerning premium bonds? 27)
A) As the time to maturity decreases, the premium increases.
B) The premium increases when interest rates increase.
C) The yield to maturity is less than the coupon rate.
D) The coupon rate is less than the current yield.
E) The par value exceeds the face value.
28) Which one of the following statements is correct concerning discount bonds? 28)
A) The clean price is greater than the dirty price.
B) The coupon rate is greater than the current yield.
C) The current yield is less than the yield to maturity.
D) Only zero-coupon bonds sell at a discount.
E) The bonds will be redeemed at maturity for less than face value.
29) Which one of the following statements applies to a par value bond? 29)
A) The par value exceeds the market price.
B) The yield-to-maturity equals the risk-free, or Treasury bill, rate.
C) The current yield, coupon rate, and yield-to-maturity are equal.
D) The dirty price equals the clean price.
E) The current yield is less than the coupon rate.
30) Assuming there is no default risk, both a premium bond and a discount bond must share 30)
which one of the following characteristics?
A) maturity value equal to a par value bond
B) current yield equal to that of a par value bond
C) coupon rate exceeding the yield-to-maturity
D) market price less than a par value bond
E) yield-to-maturity less than the coupon rate
31) A bond has a current yield that is equal to the yield-to-maturity. Given this, which one of 31)
the following must also be true?
A) The bond must pay annual interest.
B) The maturity value must be greater than the bond price.
C) The bond can have any maturity date.
D) The price must exceed the par value.
E) The coupon rate must exceed the current yield.
6
33) Davidson Industrial bonds have a current market price of $992 and a 5 percent coupon. 33)
The bonds pay interest semi-annually on March 1 and September 1. Assume today is
January 1. How many months of accrued interest are included in the dirty price of these
bonds?
A) three B) two C) five D) four E) zero
34) A bond pays interest semiannually on February 1 and August 1. Assume today is 34)
October 1. How many months of accrued interest are included in the clean price of this
bond?
A) zero B) two C) four D) three E) five
36) Which one of the following increases the probability that a bond will be called? 36)
A) The bond was issued within the past year.
B) The bond is within the call protection period.
C) The bond is selling at par.
D) Market interest rates decline.
E) The call premium is relatively high.
37) Which one of the following statements is correct concerning a callable bond that is 37)
currently selling below face value? Assume there is no risk of default. Also assume the
issuer only calls bonds when they can be refinanced at a lower rate of interest.
A) The bond is currently paying a premium.
B) The bond will most likely be called while the bonds are selling at a discount.
C) The bond is likely going to be called due to the low current interest rates.
D) The yield-to-maturity is presently more relevant to an investor than the
yield-to-call.
E) The bond issue will most likely be replaced with a new bond issue.
7
39) According to Malkiel's theorems, bond prices and bond yields are: 39)
A) uncorrelated.
B) directly related.
C) independent of each other.
D) positively related.
E) inversely related.
40) Which combination of bond characteristics causes a bond to be most sensitive to 40)
changes in market interest rates?
41) How does the size of the change in a bond's price react in response to a given change in 41)
the yield to maturity as the time to maturity increases?
A) decreases at a diminishing rate
B) increases at an increasing rate
C) increases at a diminishing rate
D) decreases at an increasing rate
E) increases at a constant rate
42) Which one of the following statements is correct according to Malkiel's Theorems? 42)
A) The price of an outstanding bond is unaffected by changes in market interest rates.
B) For a given absolute change in a bond's yield-to-maturity, a decrease in yield will
cause a greater change in the bond's price than will an increase in yield.
C) The size of the change in a bond's price increases at a constant rate given even
incremental increases in a bond's yield-to-maturity even as the term to maturity
lengthens.
D) For a given change in a bond's yield-to-maturity, the absolute magnitude of the
resulting change in the bond's price is directly related to the bond's coupon rate.
E) For a given change in a bond's yield to maturity, the shorter the term to maturity,
the greater will be the magnitude of the change in the bond's price.
8
43) Which one of the following must be equal for two bonds if they are to have similar 43)
changes in their prices given a relatively small change in bond yields?
A) market price
B) current yield
C) duration
D) time to maturity
E) coupon payment
44) All else constant, which of the following will decrease the Macaulay duration of a 44)
straight bond?
45) Which one of the following statements is correct concerning Macaulay duration? 45)
A) Most bonds have durations in excess of 15 years.
B) The duration of a coupon bond is greater than that of a zero coupon bond given
equal maturity dates.
C) The duration of a coupon bond is a linear function between the time to maturity and
the duration.
D) The duration of a zero coupon bond is equal to the time to maturity.
E) The percentage change in a bond's price is approximately equal to the change in the
yield to maturity multiplied by (-1 × Macaulay duration).
9
47) To immunize your portfolio, you should: 47)
A) match bond durations to your target dates.
B) purchase only par value bonds.
C) avoid callable bonds.
D) purchase only high-coupon bonds.
E) match bond maturity dates to your target dates.
48) Last year, you created an immunized portfolio with an average maturity date of 14.5 48)
years, a yield-to-maturity of 9.8 percent, and a duration of 9.6 years. According to the
policy of dynamic immunization, you should now modify your portfolio in which one of
the following ways?
A) modify the portfolio so the duration remains at 9.6 years
B) modify the portfolio so the average maturity remains at 14.5 years
C) modify the yield-to-maturity to 9.1 percent
D) modify the portfolio so the average maturity becomes 13.5 years
E) modify the portfolio so the duration becomes 8.6 years
49) Dynamic immunization is primarily aimed at reducing which one of the following risks? 49)
A) default
B) reinvestment
C) liquidity
D) inflation
E) taxation
50) A bond pays semiannual interest payments of $35.25. What is the coupon rate if the par 50)
value is $1,000?
A) 9.38 percent
B) 8.50 percent
C) 6.50 percent
D) 5.75 percent
E) 7.05 percent
51) A bond has a face value of $1,000 and a coupon rate of 5.5 percent. What is your annual 51)
interest payment if you own 8 of these bonds?
A) $880 B) $220 C) $330 D) $110 E) $440
52) A bond has a par value of $1,000 and a coupon rate of 6.5 percent. What is the dollar 52)
amount of each semiannual interest payment if you own 8 of these bonds?
A) $260 B) $320 C) $840 D) $180 E) $420
10
53) A bond has a par value of $1,000, a market price of $1,030, and a coupon rate of 6.0 53)
percent. What is the current yield?
A) 5.75 percent
B) 5.71 percent
C) 5.78 percent
D) 5.68 percent
E) 5.83 percent
54) A 5.5 percent coupon bond has a face value of $1,000 and a current yield of 5.64 54)
percent. What is the current market price?
A) $3,933.43
B) $989.18
C) $975.18
D) $4,067.47
E) $1,011.82
55) A bond has 8 years to maturity, a 7 percent coupon, a $1,000 face value, and pays 55)
interest semiannually. What is the bond's current price if the yield to maturity is 6.91
percent?
A) $917.92
B) $848.16
C) $1,009.73
D) $799.32
E) $1,005.46
56) The Country Inn has bonds outstanding with a par value of $1,000 each and a 5.25 56)
percent coupon. The bonds mature in 8.5 years and pay interest semiannually. What is
the current value of each of these bonds if the yield to maturity is 6.0 percent?
A) $1,009.47
B) $950.63
C) $1,004.36
D) $988.55
E) $938.40
57) Last year, BT Motors issued 10-year bonds with a 9 percent coupon and semi-annual 57)
interest payments. What is the market price of a $1,000 bond if the yield to maturity is
8.9 percent?
A) $1,585.36
B) $1,003.97
C) $1,006.53
D) $1,042.89
E) $1,414.14
11
58) A $1,000 face value bond matures in 11 years, pays interest semiannually, and has a 6.5 58)
percent coupon. The bond currently sells for $1,025. What is the yield to maturity?
A) 6.17 percent
B) 6.34 percent
C) 6.37 percent
D) 6.18 percent
E) 6.28 percent
59) A $1,000 par value 4.75 percent Treasury bond pays interest semiannually and matures 59)
in 10.5 years. What is the yield to maturity if the bond is currently quoted at a price of
110.5?
A) 3.54 percent
B) 1.77 percent
C) 3.28 percent
D) 1.54 percent
E) 1.68 percent
60) A $1,000 semiannual coupon bond matures in 15 years, has a coupon rate of 7.5 percent, 60)
and a market price of $982. What is the yield to maturity?
A) 3.86 percent
B) 4.01 percent
C) 7.70 percent
D) 4.08 percent
E) 7.53 percent
61) An 8.5 percent coupon bond pays interest semiannually and has 10.5 years to maturity. 61)
The bond has a face value of $1,000 and a market value of $878.50. What is the yield to
maturity?
A) 8.37 percent
B) 10.43 percent
C) 11.21 percent
D) 5.16 percent
E) 8.78 percent
62) A $1,000 par value bond is currently valued at $1,055. The bond pays interest 62)
semi-annually, has 10 years to maturity, and has a yield to maturity of 7.3 percent. The
coupon rate is ________ percent and the current yield is ________ percent.
A) 8.00; 7.31
B) 8.00; 7.51
C) 8.08; 7.66
D) 8.50; 8.30
E) 7.80; 6.21
12
63) A $1,000 face value bond is selling for $1,016.36. The bond pays interest semiannually 63)
and has 3.5 years to maturity. The yield to maturity is 5.48 percent. The current yield is
________ percent and the coupon rate is ________ percent.
A) 5.90; 6.00
B) 5.90; 5.86
C) 6.00; 5.86
D) 5.86; 5.90
E) 6.00; 5.90
64) The outstanding bonds of International Plastics mature in 6 years and pay semiannual 64)
interest payments of $33.50 on a $1,000 face value bond. The bonds are currently selling
for $1,008.64. The coupon rate is ________ percent, the current yield is ________
percent, and the yield to maturity is ________ percent.
A) 6.70; 6.64; 6.52
B) 6.55; 6.86; 6.60
C) 6.55; 6.91; 6.75
D) 6.70; 6.78; 6.57
E) 6.64; 6.83; 6.57
65) A bond has a $1,000 par value, semiannual interest payments of $45, and a current 65)
market value of $1,045. The bonds mature in 11.5 years. The coupon rate is ________
percent, the current yield is ________ percent, and the yield to maturity is ________
percent.
A) 9.00; 8.59; 8.33
B) 9.50; 9.12; 9.19
C) 9.00; 8.61; 8.38
D) 9.00; 8.72; 8.64
E) 9.50; 8.87; 8.73
66) Alaskan Motors has outstanding bonds that mature in 13 years and pay $34.50 every 6 66)
months in interest. The par value is $1,000 per bond and the market value is $990. The
coupon rate is ________ percent, the current yield is ________ percent, and the yield to
maturity is ________ percent.
A) 7.00; 7.67; 7.21
B) 6.90; 6.57; 6.67
C) 6.90; 6.97; 7.02
D) 6.90; 6.73; 6.71
E) 7.00; 7.37; 7.07
67) You are considering two bonds. Both have semi-annual, 8 percent coupons, $1,000 face 67)
values, and yields to maturity of 7.5 percent. Bond S matures in 4 years and Bond L
matures in 8 years. What is the difference in the current prices of these bonds?
A) $12.88 B) $11.52 C) $10.51 D) $12.67 E) $11.33
13
68) Two bonds have a coupon rate of 5.25 percent, semi-annual payments, face values of 68)
$1,000, and yields to maturity of 6.1 percent. Bond S matures in 5 years and bond L
matures in 10 years. What is the difference in the current prices of these bonds?
A) $26.78 B) $28.38 C) $27.40 D) $29.02 E) $25.26
69) You want to buy a bond that has a quoted price of $923. The bond pays interest 69)
semiannually on April 1 and October 1. The coupon rate is 6 percent. What is the clean
price of this bond if today's date is June 1? Assume a 360-day year.
A) $936.85
B) $923.00
C) $927.62
D) $923.23
E) $1,076.83
70) You are buying a bond at a quoted price of $892. The bond has a 7.5 percent coupon and 70)
pays interest semiannually on February 1 and August 1. What is the dirty price of this
bond if today is April 1? Assume a 360-day year.
A) $904.50 B) $938.50 C) $942.00 D) $896.17 E) $913.67
71) Allen Roofing Materials has 6.5 percent bonds outstanding that are currently priced at 71)
$1,044 each. The bonds pay interest on December 1 and June 1. What is the dirty price
of this bond if today's date is April 1? Assume a 360-day year.
A) $1,039.25
B) $1,110.25
C) $1,051.75
D) $1,065.67
E) $1,124.50
72) You own a bond that pays semiannual interest payments of $38. The bond is callable in 72)
2 years at a premium of $76. What is the callable bond price if the yield to call is 7.9
percent?
A) $1,124.87
B) $995.46
C) $1,059.64
D) $1,016.86
E) $1,220.87
73) Ted owns a bond which is callable in 2.5 years. The bond has a 6 percent coupon, pays 73)
interest semiannually, has a par value of $1,000, and has a yield to call of 6.3 percent.
What is the call premium if the bond currently sells for $1,044.54?
A) $80 B) $50 C) $60 D) $70 E) $75
14
74) Castle's Furniture Outlet is issuing 20-year, 8 percent callable bonds. These bonds are 74)
callable in 5 years with a call premium of $40. The bonds are being issued at par and pay
interest semi-annually. What is the yield to call?
A) 7.94 percent
B) 10.08 percent
C) 9.47 percent
D) 9.00 percent
E) 8.66 percent
75) Blue Water Homes has 8 percent bonds outstanding that mature in 13 years. The bonds 75)
pay interest semiannually. These bonds have a par value of $1,000 and are callable in 2
years at a premium of $75. What is the yield to call if the current price is equal to 103.25
percent of par?
A) 7.70 percent
B) 8.98 percent
C) 7.51 percent
D) 8.06 percent
E) 9.66 percent
76) Will owns a bond with a make-whole call provision. The bond matures in 13 years but is 76)
being called today. The coupon rate is 8.25 percent with interest paid semiannually.
What is the current call price if the applicable discount rate is 7.75 percent and the
make-whole call provision applies?
A) $1,040.51
B) $932.84
C) $957.11
D) $1,128.66
E) $1,110.28
77) Ferris Metals has bonds outstanding which it is calling today under the make-whole call 77)
provision. The bonds mature in 7 years, have a 9 percent coupon, pay interest
semiannually, and have a par value of $1,000. What is today's call price given that the
applicable discount rate is 7.05 percent?
A) $1,106.30
B) $1,172.71
C) $879.12
D) $968.35
E) $1,015.55
15
78) Alex purchased a $1,000 par value bond one year ago at a price of $1,016. At the time of 78)
purchase, the bond had 12 years to maturity and a 5 percent, semiannual coupon. Today,
the bond has a yield to maturity of 5.25 percent. What is his realized yield as of today?
A) 1.32 percent
B) 1.19 percent
C) 0.43 percent
D) 2.60 percent
E) 0.86 percent
79) One year ago, you purchased a $1,000 face value bond at a yield to maturity of 9.45 79)
percent. The bond has a 9 percent coupon and pays interest semiannually. When you
purchased the bond, it had 12 years left until maturity. You are selling the bond today
when the yield to maturity is 8.20 percent. What is your realized yield on this bond?
A) 15.27 percent
B) 18.11 percent
C) 14.54 percent
D) 16.35 percent
E) 17.60 percent
80) You own a 5.5 percent, semiannual coupon bond that matures in 8 years. The par value 80)
is $1,000 and the current yield to maturity is 6.4 percent. What will the percentage
change in the price of your bond be if the yield to maturity suddenly increases by 50
basis points?
A) -3.10 percent
B) -3.30 percent
C) -3.45 percent
D) -3.05 percent
E) -3.25 percent
81) Phil owns a 7 percent, semiannual coupon bond that has a face value of $1,000 and 81)
matures in 16 years. The bond has a current yield to maturity of 7.1 percent. What will
the percentage change in the price of his bond be if interest rates decrease by 50 basis
points?
A) 5.26 percent
B) 4.33 percent
C) 5.17 percent
D) 4.68 percent
E) 4.91 percent
16
82) A $1,000 face value bond has a 9.0 percent coupon and pays interest semiannually. The 82)
bond matures in 2 years and has a yield to maturity of 6.5 percent. What is the Macaulay
duration?
A) 2.19 years
B) 2.03 years
C) 1.65 years
D) 1.88 years
E) 1.18 years
83) A zero-coupon bond has a par value of $1,000 and matures in 6.5 years. The yield to 83)
maturity is 5.5 percent. What is the Macaulay duration?
A) 6.26 years
B) 5.81 years
C) 5.92 years
D) 5.67 years
E) 6.50 years
84) A bond has a Macaulay duration of 6.25 years. What will be the percentage change in 84)
the bond price if the yield to maturity increases from 6 percent to 6.4 percent?
A) -3.38 percent
B) -3.30 percent
C) -2.23 percent
D) -3.46 percent
E) -2.43 percent
85) The price of a bond decreased by 1.45 percent in response to an increase in the yield to 85)
maturity from 7.2 to 7.6 percent. What is the bond's Macaulay duration?
A) 3.76 years
B) 4.04 years
C) 3.39 years
D) 3.92 years
E) 4.16 years
86) A bond has a Macaulay duration of 4.5, a yield to maturity of 5.1 percent, a coupon rate 86)
of 6.0 percent, and semiannual interest payments. What is the bond's modified duration?
A) 4.39 years
B) 3.59 years
C) 4.92 years
D) 5.06 years
E) 5.26 years
17
87) A 6 percent, semiannual coupon bond has a yield to maturity of 7.4 percent and a 87)
Macaulay duration of 5.7. The bond has a modified duration of ________ and will have
a ________ percentage increase in price in response to a 25 basis point decrease in the
yield to maturity.
A) 5.4966; 1.37
B) 5.3073; 1.33
C) 5.4829; 1.35
D) 5.4966; 1.32
E) 5.3073; 1.38
88) A bond has a modified duration of 7.22 and a yield to maturity of 8.1 percent. If interest 88)
rates increase by 75 basis points, the bond's price will decrease by ________ percent.
A) -0.46 B) -0.54 C) -6.18 D) -4.60 E) -5.42
89) The outstanding bonds of Alpha Extracts have a yield to maturity of 7.4 percent and a 89)
modified duration of 11.8. If the yield to maturity instantly decreased to 6.8 percent, the
bond's price would increase/decrease by ________ percent.
A) -5.67 B) 7.08 C) 5.72 D) 1.45 E) -7.08
90) A bond has a modified duration of 5.87 years, a par value of $1,000, and a current 90)
market value of $1,008. What is the dollar value of an 01?
A) $0.6401 B) $0.5917 C) $0.0698 D) $0.7023 E) $0.0700
91) Jefferson-Smith bonds are quoted at a price of $952.42 for a $1,000 face value bond. 91)
These bonds have a modified duration of 9.84. What is the dollar value of an 01?
A) $0.0963 B) $0.9767 C) $0.0977 D) $0.9372 E) $0.1028
92) A bond has a dollar value of an 01 of 0.0748. What is the yield value of a 32nd? 92)
A) 0.4347 B) 0.4484 C) 0.4229 D) 0.4178 E) 0.4008
93) A bond pays semiannual interest payments of $38.25. What is the coupon rate if the par 93)
value is $1,000?
A) 7.65 percent
B) 5.75 percent
C) 6.50 percent
D) 9.38 percent
E) 8.50 percent
18
94) The Seaside Inn has bonds outstanding with a par value of $1,000 each and a 4.30 94)
percent coupon. The bonds mature in 7.5 years and pay interest semiannually. What is
the current value of each of these bonds if the yield to maturity is 5.0 percent?
A) $1,009.47
B) $1,004.36
C) $956.67
D) $988.55
E) $938.40
95) A $1,000 par value bond is currently valued at $1,050. The bond pays interest 95)
semi-annually, has 9 years to maturity, and has a yield to maturity of 7.72 percent. The
coupon rate is ________ percent and the current yield is ________ percent.
A) 8.00; 7.51
B) 7.80; 6.21
C) 8.00; 7.31
D) 8.50; 8.10
E) 8.08; 7.66
96) Two bonds have a coupon rate of 4.25 percent, semi-annual payments, face values of 96)
$1,000, and yields to maturity of 5.1 percent. Bond S matures in 4 years and bond L
matures in 8 years. What is the difference in the current prices of these bonds?
A) $24.86 B) $28.02 C) $25.78 D) $27.38 E) $26.40
97) Hallmark's Furniture Outlet is issuing 15-year, 7.5 percent callable bonds. These bonds 97)
are callable in 5 years with a call premium of $37.50. The bonds are being issued at par
and pay interest semi-annually. What is the yield to call?
A) 7.94 percent
B) 10.08 percent
C) 9.47 percent
D) 9.00 percent
E) 8.12 percent
98) You own a 6.5 percent, semiannual coupon bond that matures in 12 years. The par value 98)
is $1,000 and the current yield to maturity is 6.4 percent. What will the percentage
change in the price of your bond be if the yield to maturity suddenly increases by 25
basis points?
A) -2.11 percent
B) -2.44 percent
C) -2.26 percent
D) -2.31 percent
E) -2.04 percent
19
99) A bond has a Macaulay duration of 4.5, a yield to maturity of 5.1 percent, a coupon rate 99)
of 6.0 percent, and semiannual interest payments. What is the bond's modified duration?
A) 6.11 years
B) 7.26 years
C) 6.39 years
D) 7.06 years
E) 6.92 years
100) A bond has a dollar value of an 01 of 0.0710. What is the yield value of a 32nd? 100)
A) 0.4008 B) 0.4178 C) 0.4401 D) 0.4229 E) 0.4347
20
Answer Key
Testname: UNTITLED12
1) A
2) C
3) C
4) C
5) E
6) C
7) D
8) E
9) C
10) A
11) B
12) D
13) C
14) D
15) E
16) A
17) C
18) C
19) D
20) C
21) A
22) E
23) A
24) E
25) A
26) E
27) C
28) C
29) C
30) A
31) C
32) E
33) D
34) A
35) A
36) D
37) D
38) A
39) E
40) D
41) C
42) B
43) C
44) B
45) D
46) C
47) A
48) E
49) B
50) E
21
Answer Key
Testname: UNTITLED12
51) E
52) A
53) E
54) C
55) E
56) B
57) C
58) D
59) A
60) C
61) B
62) C
63) A
64) A
65) C
66) C
67) D
68) A
69) B
70) A
71) D
72) C
73) C
74) E
75) E
76) A
77) A
78) A
79) B
80) A
81) E
82) D
83) E
84) E
85) A
86) A
87) A
88) E
89) B
90) B
91) D
92) D
93) A
94) C
95) E
96) A
97) E
98) E
99) A
100) A
22