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