FINC 5310- Assignment 2 Questions with Correct Answers| Latest Update

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