FINC 5310- Assignment 2 Questions with Correct Answers| Latest Update Guaranteed Success
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. 4.03%
C. 3.37%
D. 3.27%
E. 4.42% B. 4.03%
r = (1 + .0729) / (1 + .0313) - 1 = .0403, or 4.03%
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. $1,000; $60
B. $1,060; $30
C. $1,006; $60
D. $1,000; $30
E. $1,060; $60 D. $1,000; $30
, A bond with a face value of $1,000 that sells for less than $1,000 in the market is called a _____
bond.
A. discount
B. floating rate
C. zero coupon
D. par
E. premium A. discount
A corporate bond is currently quoted at 101.633. What is the market price of a bond with a
$1,000 face value?
A. $1,000.28
B. $1,102.77
C. $1,002.77
D. $1,276.70
E. $1,016.33 E. $1,016.33
Market price = 101.633% ×$1,000 = $1,016.33
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. 4.03%
C. 3.37%
D. 3.27%
E. 4.42% B. 4.03%
r = (1 + .0729) / (1 + .0313) - 1 = .0403, or 4.03%
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. $1,000; $60
B. $1,060; $30
C. $1,006; $60
D. $1,000; $30
E. $1,060; $60 D. $1,000; $30
, A bond with a face value of $1,000 that sells for less than $1,000 in the market is called a _____
bond.
A. discount
B. floating rate
C. zero coupon
D. par
E. premium A. discount
A corporate bond is currently quoted at 101.633. What is the market price of a bond with a
$1,000 face value?
A. $1,000.28
B. $1,102.77
C. $1,002.77
D. $1,276.70
E. $1,016.33 E. $1,016.33
Market price = 101.633% ×$1,000 = $1,016.33
