Questions from General Investment


Q: Which of the following bonds offers the highest current yield?

Which of the following bonds offers the highest current yield? a. A 9½%, 20-year bond quoted at 97¾ b. A 16%, 15-year bond quoted at 164⅝ c. A 5¼%, 18-year bond quoted at 54

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Q: Assume that you pay $850 for a long-term bond

Assume that you pay $850 for a long-term bond that carries a 7½% coupon. Over the course of the next 12 months, interest rates drop sharply. As a result, you sell the bond at a price of $962.50. a. Fi...

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Q: What is the current yield for a $1,000 par

What is the current yield for a $1,000 par value bond that pays interest semiannually, has nine years to maturity, and is currently selling for $937 with a bond equivalent yield of 12%?

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Q: An investor is considering the purchase of an 8%, 18-

An investor is considering the purchase of an 8%, 18-year corporate bond that’s being priced to yield 10%. She thinks that in a year, this bond will be priced in the market to yield 9%. Using annual c...

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Q: Compute the current yield of a 10%, 25-year bond

Compute the current yield of a 10%, 25-year bond that is currently priced in the market at $1,200. Use annual compounding to find the promised yield on this bond. Repeat the promised yield calculation...

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Q: What are indicators of bond market behavior, and how are they

What are indicators of bond market behavior, and how are they different from stock market indicators? Name three sources of bond yield data.

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Q: A 10%, 25-year bond has a par value of

A 10%, 25-year bond has a par value of $1,000 and a call price of $1,075. (The bond’s first call date is in five years.) Coupon payments are made semiannually (so use semiannual compounding where appr...

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Q: Assume that an investor is looking at two bonds: Bond A

Assume that an investor is looking at two bonds: Bond A is a 20-year, 9% (semiannual pay) bond that is priced to yield 10.5%. Bond B is a 20-year, 8% (annual pay) bond that is priced to yield 7.5%. Bo...

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Q: Two bonds have par values of $1,000. One

Two bonds have par values of $1,000. One is a 5%, 15-year bond priced to yield 8%. The other is a 7.5%, 20-year bond priced to yield 6%. Which of these has the lower price? (Assume annual compounding...

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Q: A 25-year, zero-coupon bond was recently being

A 25-year, zero-coupon bond was recently being quoted at 11.625% of par. Find the current yield and the promised yield of this issue, given that the bond has a par value of $1,000. Using semiannual co...

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