Test bank về Bond và Bond Value dành cho sinh viên chuyên ngành tài chính và kinh doanh quốc tế. Test bank bao gồm đáp án chi tiết giúp sinh viên dễ giành ôn tập và rèn luyện để chuẩn bị tốt hơn cho các kỳ thi.
From Chapter – Bonds and Bond Value The stated interest payment, in dollars, made on a bond each period is called the bond's: A) Coupon B) Face value C) Maturity D) Yield to maturity E) Coupon rate Answer: A The principal amount of a bond that is repaid at the end of the loan term is called the bond's: A) Coupon B) Face value C) Maturity D) Yield to maturity E) Coupon rate Answer: B The rate of return required by investors in the market for owning a bond is called the: A) Coupon B) Face value C) Maturity D) Yield to maturity E) Coupon rate Answer: D The annual coupon of a bond divided by its face value is called the bond's: A) Coupon B) Face value C) Maturity D) Yield to maturity E) Coupon rate Answer: E A bond with a face value of $1,000 that sells for less than $1,000 in the market is called a: A) Par bond B) Discount bond C) Premium bond D) Zero coupon bond E) Floating rate bond Answer: B A bond with a face value of $1,000 that sells for more than $1,000 in the market is called a: A) Par bond B) Discount bond C) Premium bond D) Zero coupon bond E) Floating rate bond Answer: C The long-term bonds issued by the United States government are called: A) Treasury bonds B) Municipal bonds C) Floating rate bonds D) Junk bonds E) Zero coupon bonds Answer: A A bond that makes no coupon payments (and thus is initially priced at a deep discount to par value) is called a _ bond A) Treasury B) municipal C) floating rate D) junk E) zero coupon Answer: E A bond which, at the election of the holder, can be swapped for a fixed number of shares of common stock at any time prior to the bond's maturity is called a _ bond A) zero coupon B) callable C) putable D) convertible E) warrant Answer: D 10 The annual coupon payment of a bond divided by its market price is called the: A) Coupon rate B) Current yield C) Yield to maturity D) Bid-ask spread E) Capital gains yield Answer: B 11 The price a dealer is willing to accept for selling a security to an investor is called the: A) Equilibrium price B) Auction price C) Bid price D) Ask price E) Bid-ask spread Answer: D 12 A bond with a face value of $1,000 has annual coupon payments of $100 and was issued 10 years ago The bond currently sells for $1,000 and has years remaining to maturity This bond's must be 10% I yield to maturity II market premium III coupon rate A) I only B) I and II only C) III only D) I and III only E) I, II and III Answer: D 13 If you divide a bond's annual coupon payment by its current yield you get the _ A) yield to maturity B) investors' required rate of return C) annual coupon rate D) cost of capital E) bond price Answer: E 14 Which of the following statements regarding bond pricing is true? A) The lower the discount rate, the more valuable the coupon payments are today B) Bonds with high coupon payments are generally (all else the same) more sensitive to changes in interest rates than bonds with lower coupon payments C) When market interest rates rise, bond prices will also rise, all else the same D) Bonds with short maturities are generally (all else the same) more sensitive to changes in interest rates than bonds with longer maturities E) All else the same, bonds with larger coupon payments will have a lower price today Answer: A 15 Your broker offers you the opportunity to purchase a bond with coupon payments of $90 per year and a face value of $1000 If the yield to maturity on similar bonds is 8%, this bond should: A) Sell for the same price as the similar bond regardless of their respective maturities B) Sell at a premium C) Sell at a discount D) Sell for either a premium or a discount but it's impossible to tell which E) Sell for par value Answer: B 16 When pricing bonds, if a bond's coupon rate is less than the required rate of return, then: A) The holder of the bond is assured of a profit regardless of when the bond is eventually sold B) The holder of the bond will realize a capital gain if the bond is held to maturity C) The bond sells at par because the required rate of return is adjusted to reflect the discrepancy D) The bond sells at a premium if it has a long maturity and at a discount if it has a short maturity E) The bond sells at a discount if it has a long maturity and at a premium if it has a short maturity Answer: B 17 All else the same, a(n) will decrease the required return on a bond A) call provision B) lower bond rating C) sinking fund D) increase in inflation E) increase in the size of a bond issuance Answer: C 18 Which of the following items generally appears in a corporate bond quote from The Wall Street Journal? A) Yield to maturity B) Original issue price C) Current yield D) Name of the trustee E) Bond rating Answer: C 19 For a discount bond, the current yield is _ the yield to maturity, and the coupon rate is _ the yield to maturity A) less than; less than B) less than; greater than C) greater than; less than D) greater than; greater than E) equal to; equal to Answer: A 20 For a premium bond, the required return is less than the: I Current yield II Yield to maturity III Coupon rate A) B) C) D) E) I only I and II only II and III only I and III only I, II, and III 21 If investors are uncertain that they will be able to sell a corporate bond quickly, the investors will demand a higher yield in the form of a(n) A) inflation premium B) liquidity risk premium C) interest rate risk premium D) default risk premium E) increased real rate of interest Answer: B 22 Dizzy Corp bonds bearing a coupon rate of 12%, pay coupons semiannually, have years remaining to maturity, and are currently priced at $940 per bond What is the yield to maturity? A) 12.00% B) 13.99% C) 14.54% D) 15.25% E) 15.57% Answer: C Response: $940 = 1000 FV, 60 PMT, N, -940 PV, CPT I/Y = 7.27%; YTM = 7.27% x = 14.54% 23 Whitesell Athletic Corporation's bonds have a face value of $1,000 and a 9% coupon paid semiannually; the bonds mature in years What current yield would be reported in The Wall Street Journal if the yield to maturity is 7%? A) 4% B) 5% C) 6% D) 7% E) 8% Answer: E Response: 1000 FV, 45 PMT, 16 N, 3.5 I/Y, CPT PV = $1,120.94; Annual coupon is 45 x = 90 Current Yield (CY) = $90 / 1,120.94 = 8.03% 24 D&G Enterprises issues bonds with a $1,000 face value that make coupon payments of $30 every months What is the coupon rate? A) 0.30% B) 3.00% C) 9.00% D) 12.00% E) 30.00% Answer: D Response: coupon rate = ($30 x 4) / 1,000 = 12% 25 Suppose you purchase a zero coupon bond with face value $1,000, maturing in 25 years, for $180 What is the implicit interest, in dollars, in the first year of the bond's life? A) $ 2.86 B) $ 9.84 C) $12.78 D) $19.27 E) $30.00 Answer: C 1000 FV, 25 N, -180 PV, CPT I/Y = YTM = 7.1%; Year interest = $180 x 071 = $12.78 26 Suppose you purchase a zero coupon bond with a face value of $1,000 and a maturity of 25 years, for $180 If the yield to maturity on the bond remains unchanged, what will the price of the bond be years from now? A) $253.64 B) $287.52 C) $310.91 D) $380.58 E) $500.00 Answer: A 1000 FV, 25 N, -180 PV, CPT I/Y = 7.1%; -180 PV, N, 7.1 I/Y, CPT FV = $253.64 27 What is the yield to maturity on an 18-year, zero coupon bond selling for 30% of par value? A) 4.86% B) 5.86% C) 6.37% D) 6.92% E) 30.00% Answer: D 1000 FV, 18 N, -300 PV, CPT I/Y = YTM = 6.92% 28 J&J Enterprises wants to issue sixty 20-year, $1,000 zero-coupon bonds If each bond is to yield 7%, how much will J&J receive (ignoring issuance costs) when the bonds are first sold? A) $11,212 B) $12,393 C) $15,505 D) $18,880 E) $20,000 Answer: C Response: price = $1,000 / 1.0720 = $258.42; proceeds = $258.42 x 60 = $15,505 There is the algebra, but what are the entries using your TVOM keys on your TI BA II Plus? And what of the algebra and keystrokes for numbers 29-40 below? Recognizing the algebra is important, and extending that recognition to the keystrokes is “key.” 29 J&J Enterprises wants to issue 20-year, $1,000 face value zero-coupon bonds If each bond is to yield 7%, what is the minimum number of bonds J&J must sell if they wish to raise $5 million from the sale? (Ignore issuance costs.) A) 17,290 B) 19,349 C) 20,164 D) 23,880 E) 26,159 Answer: B Response: price = $1,000 / 1.0720 = $258.42; # of bonds = $5,000,000 / 258.42 = 19,349 30 What is the market value of a bond that will pay a total of fifty semiannual coupons of $80 each over the remainder of its life? Assume the bond has a $1,000 face value and a 12% yield to maturity A) $ 734.86 B) $ 942.26 C) $1,135.90 D) $1,315.24 E) $1,545.62 Answer: D 50 N, 80 PMT, 1000 FV, 12/2 = I/Y, CPT PV = -1,315 31 J&J Manufacturing just issued a bond with a $1,000 face and a coupon rate of 8% The bond has a life of 20 years, annual coupons, and a yield to maturity is 7.5%, what will the bond sell for? A) $ 975 B) $1,020 C) $1,051 D) $1,087 E) $1,162 Answer: C 1000 FV, 80 PMT, 20 N, 7.5 I/Y, CPT PV = -1,051 32 J&J Manufacturing just issued a bond with a $1,000 face value and a coupon rate of 8% If the bond has a life of 20 years, pays annual coupons, and the yield to maturity is 7.5%, what percent of the bond's total price is represented by the present value of the coupons? A) 45.7% B) 56.1% C) 77.6% D) 93.2% E) 100.0% Answer: C Response: Using the TVOM keystrokes above, you get the price of around $1,051 Now, in this problem, you must calculate the value of the annuity stream (the interest payments or coupons) and divide that into the bond price Recall that the total bond value is comprised of the PV of the coupons plus the PV of the maturity payoff of $1000 Keystrokes for the PV of the coupons? 80 PMT, 7.5 I/Y, 20 N, CPT PV = -815.56 Divide that into 1051 and you get $815.56 / 1,050.97 = 77.6% 33 J&J Manufacturing just issued a bond with a $1,000 face value and a coupon rate of 8% If the bond has a life of 20 years, pays annual coupons, and the yield to maturity is 7.5%, what is the present value of the bond's face value? A) $ 235.41 B) $ 341.15 C) $ 815.56 D) $1,000.00 E) $1,050.97 Answer: A, Response: PV of par = $1,000 / 1.07520 = $235.41 (1000 FV, 20 N, 7.5 I/Y, CPT PV = 235.41) 34 J&J Manufacturing just issued a bond with a $1,000 face value and a coupon rate of 8% If the bond has a life of 20 years, pays annual coupons, and the yield to maturity is 7.5%, what is the total present value of the bond's coupon payments? A) $ 235.41 B) $ 341.15 C) $ 815.56 D) $1,000.00 E) $1,050.97 Answer: C Response: PV of coupons = $80 [(1 1/1.07520)/ 075] = $815.56 Using the TVOM keys instead of algebra? Coupon payments are 8% of $1000 or $80 So, 80 PMT, 20 N, 7.5I/Y, CPT PV = 815.56 35 The market price of a bond is $1,236.94, it has 14 years to maturity, a $1,000 face value, and pays an annual coupon of $100 in semiannual installments What is the yield to maturity? A) 3.18% B) 4.26% C) 5.37% D) 6.11% E) 7.27% Answer: E Response: $1,236.94 = $50 {[1 - 1/(1 + R)28] / R} + 1,000 / (1 + R)28; R = 3.637%; YTM = 3.64% x = 7.27% The algebra is a bit annoying, so the TVOM stuff, thusly: -1,236.94PV, 1000 FV, 28 N, 50 PMT, CPT I/Y = 3.637 I/Y x = 3.637 x = 7.274 or 7.27% 36 What would you pay for a bond that pays an annual coupon of $45, has a face value of $1,000, matures in 11 years, and has a yield to maturity of 10%? A) $642.77 B) $775.34 C) $800.18 D) $910.14 E) $976.38 Answer: A Response: price = $45 [(1 - 1/1.111) / 1] + 1,000 / 1.111 = $642.77 TVOM stuff? 1000 FV, 45 PMT, 11 N, 10 I/Y, CPT PV = -642.77 37 King Noodles' bonds have a 9% coupon rate Interest is paid quarterly and the bonds have a maturity of 10 years If the appropriate discount rate is 10% on similar bonds, what is the price of King Noodles' bonds? A) $937.24 B) $938.55 C) $971.27 D) $989.63 E) $991.27 Answer: A 1000 FV, 90/4 = 22.5 PMT, 10 x = 40 N, 10/4=2.5 I/Y, CPT PV = -937.24 38 Cornerstone Industries has a bond outstanding with an 8% coupon rate and a market price of $874.68 If the bond matures in years and interest is paid semiannually, what is the YTM? A) 4.9% B) 6.9% C) 8.9% D) 10.9% E) 12.9% Answer: D Response: $874.68 = $40 {[1 - 1/(1 + R)12] / R} + 1,000 / (1 + R)12; R = 5.45%; YTM = 5.45% x = 10.9% TVOM keystrokes? 40 PMT, 12 N, 1000 FV, -874.68 PV, CPT I/Y = 5.45 x = YTM = 10.9% 39 The make-believe bonds of Facebook carry a 12% annual coupon, have a $1,000 face value, and mature in years Bonds of equivalent risk yield 9% What is the market value of Facebook bonds? A) $1,011.20 B) $1,087.25 C) $1,095.66 D) $1,116.69 E) $1,160.25 Answer: D Response: price = $120 [(1 - 1/1.095) / 09] + 1,000 / 1.095 = $1,116.69 1000 FV, 120 PMT, N, I/Y, CPT PV = -1,116.69 40 If the following bonds are identical except for coupon, what is the price of bond B? Face value Semiannual Coupon Years to maturity Price Bond A $1,000 $50 25 $1,150.00 Bond B $1,000 $40 25 ? A) $ 944.58 B) $ 975.31 C) $1,037.86 D) $1,150.00 E) $1,279.47 Answer: A Response: Bond A: $1,150 = $50 {[1 - 1/(1 + R)50 ]/ R} + 1,000 / (1 + R)50; R = 4.27%; Bond B: price = $40 [(1 - 1/1.042750) / 0427] + 1,000 / 1.042750 = $944.58 First, compute the YTM for bond A, thusly: 1000 FV, 25x2=N, 50 PMT, -1,150 PV, CPT I/Y = 4.27 (that is the YTM per six months for a semiannual bond – were you to calculate the annual YTM, you would multiply 4.27 by to get 8.54%) Then compute PV of bond B (here, you use the 4.27 6-month YTM as your I/Y, to keep things consistent): 1000 FV, 40 PMT, 25x2= N, 4.27 I/Y, CPT PV = -944.58 41 If corporate bond yields are at 8.4% and you are in the 34% federal marginal income tax bracket, at what level of municipal bond yields would you be indifferent between owning corporate bonds or muni bonds? Ignore the impact of state and local taxes A) 5.95% B) 5.54% C) 5.03% D) 4.67% E) 4.11% Answer: B First calculate the after-tax yield of the corp bond: ATY = Before-tax yield times (1- Tax Rate) Response? ATY = BTY (1 - 34) = 084 (1 - 34) = 084(.66) = 0554 or 5.54% ... The long-term bonds issued by the United States government are called: A) Treasury bonds B) Municipal bonds C) Floating rate bonds D) Junk bonds E) Zero coupon bonds Answer: A A bond that makes... issued a bond with a $1,000 face value and a coupon rate of 8% If the bond has a life of 20 years, pays annual coupons, and the yield to maturity is 7.5%, what is the total present value of the bond' s... just issued a bond with a $1,000 face value and a coupon rate of 8% If the bond has a life of 20 years, pays annual coupons, and the yield to maturity is 7.5%, what percent of the bond' s total