Questions from General Investment

Q: A municipal bond with a coupon rate of 2.7 percent

A municipal bond with a coupon rate of 2.7 percent has a yield to maturity of 3.9 percent. If the bond has 10 years to maturity, what is the price of the bond?

Q: A municipal bond with a coupon rate of 6.2 percent

A municipal bond with a coupon rate of 6.2 percent sells for $4,920 and has seven years until maturity. What is the yield to maturity of the bond?

Q: She would like to compute the value of the corresponding put option

She would like to compute the value of the corresponding put option for Option 2. Which of the following is closest to Ms. Barlow’s answer? a. $0.98 b. $1.41 c. $4.84

Q: Assume a municipal bond has 18 years until maturity and sells for

Assume a municipal bond has 18 years until maturity and sells for $5,640. It has a coupon rate of 5.70 percent and it can be called in 10 years. What is the yield to call if the call price is 110 perc...

Q: A taxable corporate issue yields 6.5 percent. For an

A taxable corporate issue yields 6.5 percent. For an investor in a 35 percent tax bracket, what is the equivalent after tax yield?

Q: A taxable issue yields 6.4 percent, and a similar

A taxable issue yields 6.4 percent, and a similar municipal issue yields 4.7 percent. What is the critical marginal tax rate?

Q: A company just sold a convertible bond at a par value of

A company just sold a convertible bond at a par value of $1,000. If the conversion price is $58, what is the conversion ratio?

Q: A convertible bond has a $1,000 face value and

A convertible bond has a $1,000 face value and a conversion ratio of 36. If the stock price is $42, what is the conversion value?

Q: A bond matures in 25 years but is callable in 10 years

A bond matures in 25 years but is callable in 10 years at 120. The call premium decreases by 2 percent of par per year. If the bond is called in 14 years, how much will you receive?

Q: You own a bond with a 6 percent coupon rate and a

You own a bond with a 6 percent coupon rate and a yield to call of 6.90 percent. The bond currently sells for $1,070. If the bond is callable in five years, what is the call premium of the bond?