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ExamName___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) With an interest rate of 6 percent, the present value of $100 next year is approximately 1) _______ A) $106. B) $100. C) $94. D) $92. 2) The ________ is the final amount that will be paid to the holder of a coupon bond. 2) _______ A) face value B) present value C) discount value D) coupon value 3) If a $5,000 coupon bond has a coupon rate of 13 percent, then the coupon payment every year is 3) _______ A) $13. B) $1,300. C) $130. D) $650. 4) Examples of discount bonds include4) _______ A) corporate bonds. B) U.S. Treasury notes. C) U.S. Treasury bills. D) municipal bonds. 5) The ________ of a coupon bond and the yield to maturity are inversely related. 5) _______ A) maturity date B) price C) term D) par value 6) The yield to maturity is ________ than the ________ rate when the bond price is ________ its face value. 6) _______ A) greater; coupon; below B) less; perpetuity; below C) greater; perpetuity; above D) greater; coupon; above 7) Which of the following $1,000 face-value securities has the lowest yield to maturity? 7) _______ A) A 15 percent coupon bond selling for $900 B) A 5 percent coupon bond selling for $1,000 C) A 10 percent coupon bond selling for $1,000 D) A 15 percent coupon bond selling for $1,0008) A coupon bond that has no maturity date and no repayment of principal is called a 8) _______ A) Treasury bill. B) Treasury note. C) cabinet. D) consol. 9) If a perpetuity has a price of $500 and an annual interest payment of $25, the interest rate is 9) _______ A) 2.5 percent. B) 5 percent. C) 7.5 percent. D) 10 percent. 10) If a $10,000 face-value discount bond maturing in one year is selling for $5,000, then its yield to maturity is 10) ______ A) 5 percent. B) 10 percent. C) 50 percent. D) 100 percent. 1) C 2) A3) D 4) C 5) B 6) A 7) B 8) D 9) B 10)

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