A bond has a face value of 1000 The bond matures in 10 years

A bond has a face value of $1,000. The bond matures in 10 years. It has a coupon rate of 8% and pays interest annually. The yield is 9%. What is the price of the bond?

Question 1 options:

A) 1,122.15

B) 788.56

C) 1,000.00

D) 935.82

Question 2: A bond has a par value of 1,000. Matures in 20 years. Coupon rate of 11% per year. Annual coupon payments. Yield on this bond is 12%. What is the price?

Question 2 options:

A) 1,000.00

B) 925.31

C) 856.71

D) 1,100.22

Question 3: What can be stated for certain, before performing any calculations on the following bond? Face value $1,000. Coupon rate 9%. Yield 9%.

Question 3 options:

A) The bond price equals face value.

B) The bond will be priced at a discount to face value.

C) The bond will be priced at a premium to face value.

Question 4: A bond has a face (par) value of 10,000. It matures in 20 years. The bond has an annual coupon of 9%. Based on a market rate (yield) of 7%, what is the current price of the bond?

Question 4 options:

A) 12,118.80

) 10,000.00

C) 11,243.00

D) 9,765.23

Question 5: A bond has a par value of 10,000. It matures in 15 years. The bond has a coupon rate of 7%, paid annually. Based on a market rate (yield) of 6%, what is the bond\'s price?

Question 5 options:

A) 10,971.22

B) 9,892.12

C) 10,000.00

D) 9,789.34

Question 6: A bond matures in 15 years with a $1,000 face value. The bond has a coupon rate of 12%, but payments are made semi-annually. Based on a yield of 9% in the marketplace, what is the bond\'s current price?

Question 6 options:

A) 1,244.33

B) 1,345.09

C) 1,000.00

D) 978.65

Question 7:Before performing any calculations, what can be stated with certainty about the following bond? Face value 1,000. Coupon rate 9%. Yield 10%.

Question 7 options:

A)The bond will trade at a discount to face value.

B)The bond will be priced at a premium to face value.

C)The bond price will equal face value.

Question 8: A bond with semi-annual coupon payments has the following characteristics: Par value of 10,000; coupon rate of 10% (annual); maturity date 30 years; yield of 9%. What is the current price?

Question 8 options:

A) 11,031.90

B) 9,566.76

C) 12,355.23

D) 10,000.00

Question - 1

Price of the bond = Coupon * [ 1 - (1+r)^-n ] / r + Face value * (1+r)^-n

coupon = 1000*8% = 80 ,,,,,,,, r = 0.09 and n = 10 years

80 * [ 1 - (1.09)^-10 ] / 0.09 + 1000 * (1.09)^-10 = 935.82....................... Option - D

Question - 2

Price of the bond = Coupon * [ 1 - (1+r)^-n ] / r + Face value * (1+r)^-n

coupon = 1000*11% = 110 ,,,,,,,, r = 0.12 and n = 20 years

110 * [ 1 - (1.12)^-20 ] / 0.12 + 1000 * (1.12)^-20 = 925.31....................... Option - B

Question - 3

A) The bond price equals face value.

It happens like this every time when coupon rate equals the Yield rate

Question - 4

Question 4: A bond has a face (par) value of 10,000. It matures in 20 years. The bond has an annual coupon of 9%. Based on a market rate (yield) of 7%, what is the current price of the bond?

Price of the bond = Coupon * [ 1 - (1+r)^-n ] / r + Face value * (1+r)^-n

coupon = 10000*9% = 900 ,,,,,,,, r = 0.07 and n = 20 years

900 * [ 1 - (1.07)^-20 ] / 0.07 + 10000 * (1.07)^-20 = 12118.80....................... Option - A

Question - 5

Price of the bond = Coupon * [ 1 - (1+r)^-n ] / r + Face value * (1+r)^-n

coupon = 10000*7% = 700 ,,,,,,,, r = 0.06 and n = 15 years

700 * [ 1 - (1.06)^-15 ] / 0.06 + 10000 * (1.06)^-15 = 10971.22....................... Option - A

Question - 6

A bond matures in 15 years with a $1,000 face value. The bond has a coupon rate of 12%, but payments are made semi-annually. Based on a yield of 9% in the marketplace, what is the bond\'s current price?

Price of the bond = Coupon * [ 1 - (1+r)^-n ] / r + Face value * (1+r)^-n

coupon = 1000*12% * 1/2 = 60 ,,,,,,,, r = 0.09/2 = 0.045 and n = 15 years * 2 = 30

60 * [ 1 - (1.045)^-30 ] / 0.045 + 1000 * (1.045)^-30 = 1244.33...................... Option - A

Question - 7

A) Bonds will be traded at discount.

Because the company is paying less than what is expected as yield.

Question - 8 ............. A) 11,031.90