Chapter 07 Quiz B Student Name _________________________

Student ID ____________

________ 1. A semi-annual corporate bond has a face value of $1,000, a yield to maturity of 7.3 percent, and
a coupon rate
of 8 percent. The bond matures 6 years from today. This bond:
a. pays interest payments of $80 every six months.
b. sells at a premium.
c. has a current yield that is greater than 8 percent.
d. is currently quoted at a price of 103:11.
________ 2.

The price you pay when you purchase a Treasury bond is the _____ price.
a. bid
b. yield
c. call
d. asked

________ 3.

Which one of the following bonds has the least interest rate risk?
a. 5-year; 6 percent coupon
b. 5-year; zero coupon
c. 10-year; zero coupon
d. 10-year; 6 percent coupon

________ 4. What is the tax-equivalent yield of a 3.5 percent municipal bond if the bondholder is in the 28
percent federal
tax bracket? Ignore state and local taxes.
a. 2.52 percent
b. 4.86 percent c. 6.13 percent d. 12.50 percent
________ 5. Jenny earned 9.2 percent on her investments last year. What was her real rate of return if the
inflation rate
was 2.6 percent?
a. 3.54 percent
b. 6.43 percent c. 6.60 percent d. 12.04 percent
________ 7. Black and White, Inc. offers an 8 percent bond with a yield to maturity of 8.35 percent. The
bond pays
interest annually and matures in 19 years. What is the market price of one of these bonds if the
face value is
$1,000?
a. $958.08
b. $966.94
c. $967.22
d. $1,033.61
________ 8. A zero coupon bond is currently priced to yield 6.3 percent if held to maturity 14.5 years from
now. What is
the current price of this bond if the face value is $1,000?
a. $406.81
b. $409.12
c. $412.35
d. $414.14
________ 9. The bonds of B&O, Inc. are currently quoted at 99.54 and have a 7.25 percent coupon. The
bonds
pay interest semi-annually and mature in 12 years. What is the current yield on these bonds?
a. 7.14 percent
b. 7.23 percent c. 7.28 percent d. 7.31 percent
________ 10. A semi-annual, five-year bond is currently selling for $1,122 and has a yield to maturity of 6.13
percent.
What is the coupon rate of this bond if the face value is $1,000?
a. 4.5 percent
b. 6.0 percent
c. 7.5 percent
d. 9.0 percent

Chapter 07 Quiz C Student Name _________________________

________ 1.
and a coupon

Student ID ____________

A semi-annual corporate bond has a face value of $1,000, a yield to maturity of 5.98 percent,
rate of 6 percent. The bond matures 17 years from today. This bond:
a. pays interest payments of $30 every quarter.
b. has an asked price of $1,002.12 and a bid price of $1,000.
c. has a current yield that is less than 6 percent.
d. is currently quoted at a price of 100:01.

________ 2.

The term structure of interest rates depicts the:

a. relationship between real interest rates and time to maturity.
b. relationship between market interest rates and bond prices.
c. the pure time value of money.
d. the pure interest rate risk premium.

________ 3.

Which of the following are reflected in the Treasury yield curve?

a. inflation premium, default risk premium, real rate of return
b. real rate of return, interest rate risk premium, liquidity premium
c. inflation premium, taxability premium, real rate of return
d. real rate of return, inflation premium, interest rate risk premium

________ 5. Jenny earned 3.1 percent on her savings account last year. What was her real rate of return if the
inflation rate
was 3.6 percent?
a. -3.21 percent
b. -.48 percent c. .50 percent
d. 3.71 percent
________ 7. Black and White, Inc. offers a 9 percent bond with a yield to maturity of 8.15 percent. The bond
pays
interest annually and matures in 7 years. What is the market price of one of these bonds if the
face value is
$1,000?
a. $933.82
b. $956.55
c. $1,044.03
d. $1,044.67
________ 8. A zero coupon bond is currently priced to yield 5.7 percent if held to maturity 3.8 years from
now. What is
the current price of this bond if the face value is $1,000?
a. $808.49
b. $810.06
c. $898.72
d. $946.07
________ 9. The bonds of B&O, Inc. are currently quoted at 98.54 and have a 6.75 percent coupon. The
bonds pay interest
semi-annually and mature in 9 years. The inflation rate is 3.6 percent. What is the current yield
on these
bonds?
a. 3.25 percent
b. 4.67 percent c. 6.85 percent d. 6.97 percent
________ 10. A semi-annual, ten-year bond is currently selling for $836.19 and has a yield to maturity of 7.90
percent.
What is the coupon rate of this bond if the face value is $1,000?
a. 2.75 percent
b. 3.50 percent c. 4.25 percent d. 5.50 percent