Fin 325 chapter 6

Which one of the following represents additional compensation provided to bondholders to offset the possibility that the bond issuer might not pay the interest and/or principal payments as expected?

On which one of the following dates is the principal amount of a bond repaid?

The inflation premium:

Red Mountain, Inc. bonds have a face value of $1,000. The bonds carry a 7 percent coupon, pay interest semiannually, and mature in 13.5 years. What is the current price of these bonds if the yield to maturity is 6.82 percent?

The $1,000 face value bonds of Shonesy International have a 7.5 percent coupon and pay interest annually. Currently, the bonds are quoted at 95.27 and mature in 3.5 years. What is the yield to maturity?

The 8 percent, $1,000 face value bonds of Sweet Sue Foods are currently selling at $1,057. These bonds have 16 years left until maturity. What is the current yield?

The current yield on a bond is equal to the annual interest divided by which one of the following?

Which one of the following is the rate of return an investor earns on a bond before adjusting for inflation?

When a bond's yield to maturity is less than the bond's coupon rate, the bond:

The 6 percent coupon bonds of Precision Engineering are selling for 98 percent of par value. The bonds mature in eight years and pay interest semiannually. These bonds have current yield of _____ percent, a yield to maturity of _____ percent, and an effective annual yield of _____ percent.

Arts and Crafts Warehouse wants to issue 15-year, zero coupon bonds that yield 7.5 percent. What price should it charge for these bonds if the face value is $1,000? (Assume semiannual compounding.)

If your nominal rate of return is 14.38 percent and your real rate of return is 4.97 percent, what is the inflation rate?

The yield to maturity on a discount bond is:

A real rate of return is defined as a rate that has been adjusted for which one of the following?

Last year, you earned a rate of return of 12.37 percent on your bond investments. During that time, the inflation rate was 3.6 percent. What was your real rate of return?

This morning, Jeff found a bond certificate lying on the floor of a bank. He picked it up and noticed that the bond matured today. He presented the bond to the bank teller and received both the principal and interest payment. The bond that Jeff found must have been which one of the following?

A 12-year, semiannual coupon bond is priced at $1,102.60. The bond has a $1,000 face value and a yield to maturity of 5.33 percent. What is the coupon rate?

A call provision grants the bond issuer the:

A bond has a $1,000 face value, a market price of $1,045, and pays interest payments of $80 every year. What is the coupon rate?

Which one of the following terms refers to a bond's rate of return that is required by the marketplace?

A zero coupon bond with a face value of $1,000 is issued with an initial price of $507.96. The bond matures in 18 years. What is the implicit interest, in dollars, for the first year of the bond's life? Use semiannual compounding.

Crossfade Co. issued 16-year bonds two years ago at a coupon rate of 8.5 percent. The bonds make semiannual payments. Required: If these bonds currently sell for 109 percent of par value, what is the YTM?