FINC 5310- Assignment 2 2026 Semester 1 Due 16th April 2026 Success Guaranteed

FINC 5310- Assignment 2 2026 Semester 1 Due 16th April 2026 Success
Guaranteed


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%AnswerB. 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; $60AnswerD. $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. premiumAnswerA. 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. $1,016.33AnswerE. $1,016.33



Market price = 101.633% ×$1,000 = $1,016.33