Finance
1. A five-year treasury bond with a coupon rate of 8 percent has a face value of $1,000. What is the semiannual interest payment?
2. A three-year bond has an 8 percent coupon rate and a $1,000 face value. If the yield to maturity on the bond is 10 percent, calculate the price of the bond assuming that the bond makes semiannual coupon payments.
3. Consider a bond with a face value of $1,000, an annual coupon rate of 6 percent, a yield to maturity of 8 percent, and 10 years to maturity. This bond’s duration is
8.7 years.
7.6 years.
10.0 years.
6.5 years.
4. A bond has a face value of $1,000, an annual coupon rate of 7 percent, yield to maturity of 10 percent, and 20 years to maturity. The bond’s duration is
10.0 years.
7.4 years.
20.0 years.
12.6 years.
5.
A bond has a face value of $1,000, a coupon rate of 0 percent, yield to maturity of 9 percent, and 10 years to maturity. This bond’s duration is
6.7 years.
7.5 years.
9.6 years.
10.0 years.
6. A bond with duration of 10 years has a yield to maturity of 10 percent. This bond’s volatility (modified duration) is
9.09 percent.
6.8 percent.
14.6 percent.
10.0 percent.
7. A bond with duration of 5.7 years has a yield to maturity of 9 percent. The bond’s volatility (modified duration) is
1.9 percent.
5.2 percent.
5.7 percent.
9.0 percent.
Question 8.
If a bond’s volatility is 5.0 percent and its yield to maturity changes by 0.5 percent (points), then the price of the bond
changes by 5.0 percent.
changes by 2.5 percent.
changes by 7.5 percent.
will not change.
Question 9.
The volatility of a bond is given by
duration/(1 + yield) only.
slope of the curve relating the bond price to the interest rate only.
yield to maturity only.
duration/(1 + yield) and slope of the curve relating the bond price to the interest rate only.
Question 10. If the nominal interest rate per year is 10 percent and the inflation rate is 4 percent, what is the real rate of interest?
10.0 percent
4.1 percent
5.8 percent
14.0 percent
PLACE THIS ORDER OR A SIMILAR ORDER WITH US TODAY AND GET A GOOD DISCOUNT
