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CHAPTER 2 BOND VALUATION 1) A newly issued bond has a coupon rate of 7 percent and semiannual interest payments. The bonds are currently priced at par. The effective annual rate provided by these bonds must be: A) 3.5 percent. B) greater than 3.5 percent but less than 7 percent. C) 7 percent. D) greater than 7 percent. E) less than 3.5 percent. 2) Oil Wells offers 5.65 percent coupon bonds with semiannual payments and a yield to maturity of 6.94 percent. The bonds mature in seven years. What is the market price per bond if the face value is RM1,000? A) RM949.70 B) RM929.42 C) RM936.48 D) RM902.60 E) RM913.48 3) Roadside Markets has 8.45 percent coupon bonds outstanding that mature in 10.5 years. The bonds pay interest semiannually. What is the market price per bond if the face value is RM1,000 and the yield to maturity is 7.2 percent? A) RM1,199.80 B) RM999.85 C) RM903.42 D) RM1,091.00 / E) RM1,007.52 4) Luxury Properties offers bonds with a coupon rate of 8.8 percent paid semiannually. The yield to maturity is 11.2 percent and the maturity date is 11 years from today. What is the market price of this bond if the face value is RM1,000? A) RM850.34 B) RM896.67 C) RM841.20 D) RM846.18 E) RM863.30 5) Do-Well bonds have a face value of RM1,000 and are currently quoted at 867.25. The bonds have coupon rate of 6.5 percent. What is the current yield on these bonds? A) 7.45 percent B) 7.67 percent C) 7.49 percent D) 8.03 percent E) 8.47 percent

6) The RM1,000 par value bonds of Uptown Tours have a coupon rate of 6.5 and a current price quote of 101.23. What is the current yield? A) 6.60 percent B) 6.37 percent C) 6.42 percent / D) 6.49 percent E) 6.58 percent 7) A RM10,000 face value Treasury bond is quoted at a price of 101.6533 with a current yield of 4.87 percent. What is the coupon rate? A) 5.20 percent B) 4.48 percent C) 5.41 percent D) 4.95 percent E) 4.27 percent 8) A corporate bond is quoted at a price of 98.96 and has a coupon rate of 4.8 percent, paid semiannually. What is the current yield? A) 4.24 percent B) 4.85 percent C) 5.36 percent D) 5.62 percent E) 4.66 percent 9) A 3.25 percent Treasury bond is quoted at a price of 99.04. The bond pays interest semiannually. What is the current yield? A) 2.94 percent B) 2.99 percent C) 3.28 percent D) 3.33 percent E) 3.23 percent 10) Kaiser Industries has bonds on the market making annual payments, with 14 years to maturity, a par value of RM1,000, and a current price of RM1,108.60. At this price, the bonds yield 7.5 percent. What is the coupon rate? A) 8.93 percent B) 8.46 percent C) 9.01 percent D) 9.32 percent E) 8.78 percent

11) Dexter Mills issued 20-year bonds one year ago at a coupon rate of 10.2 percent. The bonds make semiannual payments and have a par value of RM1,000. If the YTM is 8.2 percent, what is the current bond price? A) RM985.55 B) RM991.90 C) RM1,142.16 D) RM1,190.93 E) RM1,098.00 12) The 7 percent, semiannual coupon bonds offered by House Renovators are callable in two years at RM1,035. What is the amount of the call premium if the bonds have a par value of RM1,000? A) RM42 B) RM35 C) RM70 D) RM67 E) RM105...