# [i]. An 8 percent annual coupon, noncallable bond

[i]. An 8 percent annual coupon, noncallable bond has ten years until it matures and a yield to maturity of 9.1 percent. What should be the price of a 10-year noncallable bond of equal risk which pays an 8 percent semiannual coupon? Assume both bonds have a par value of \$1,000.

1. \$ 898.64

1. \$ 736.86

1. \$ 854.27

1. \$ 941.09

1. \$ 964.23

[ii]. Kennedy Gas Works has bonds which mature in 10 years, and have a face value of \$1,000. The bonds have a 10 percent quarterly coupon (i.e., the nominal coupon rate is 10 percent). The bonds may be called in five years. The bonds have a nominal yield to maturity of 8 percent and a yield to call of 7.5 percent. What is the call price on the bonds?

1. \$ 379.27

1. \$1,025.00

1. \$1,048.34

1. \$1,036.77

1. \$1,136.78

[iii]. Hood Corporation recently issued 20-year bonds. The bonds have a coupon rate of 8 percent and pay interest semiannually. Also, the bonds are callable in 6 years at a call price equal to 115 percent of par value. The par value of the bonds is \$1,000. If the yield to maturity is 7 percent, what is the yield to call?

1. 8.33%

1. 7.75%

1. 9.89%

1. 10.00%

1. 7.00%

[iv]. A 12-year bond with a 10 percent semiannual coupon and a \$1,000 par value has a nominal yield to maturity of 9 percent. The bond can be called in five years at a call price of \$1,050. What is the bond’s nominal yield to call?

1. 4.50%

1. 8.25%

1. 8.88%

1. 8.98%

1. 9.00%

[v]. A corporate bond with an 11 percent semiannual coupon has a yield to maturity of 9 percent. The bond matures in 20 years but is callable in ten years. The maturity value is \$1,000. The call price is \$1,055. What is the bond’s yield to call?

1. 8.43%

1. 8.50%

1. 8.58%

1. 8.65%

1. 9.00%

[vi]. A corporate bond which matures in 12 years, pays a 9 percent annual coupon, has a face value of \$1,000, and a yield to maturity of 7.5 percent. The bond can first be called four years from now. The call price is \$1,050. What is the bond’s yield to call?

1. 6.73%

1. 7.10%

1. 7.50%

1. 11.86%

1. 13.45%

[vii]. A bond that matures in 11 years has an annual coupon rate of 8 percent with interest paid annually. The bond’s face value is \$1,000 and its yield to maturity is 7.5 percent. The bond can be called 3 years from now at a price of \$1,060. What is the bond’s nominal yield to call?

1. 9.82%

1. 8.41%

1. 8.54%

1. 8.38%

1. 7.86%

[viii]. McGriff Motors has bonds outstanding which will mature in 12 years. The bonds pay a 12 percent semiannual coupon and have a face value of \$1,000 (i.e., the bonds pay a \$60 coupon every six months). The bonds currently have a yield to maturity of 10 percent. The bonds are callable in 8 years and have a call price of \$1,050. What are the bonds’ yield to call?

1. 8.89%

1. 9.89%

1. 9.94%

1. 10.00%

1. 12.00%

[ix]. A company is issuing \$1,000 bonds at par value. The coupon rate (and yield to maturity) on the bonds is 8 percent (with annual payments) and the bonds will mature in 10 years. The bonds can be called at a call premium of 5 percent above face value after 3 years. What is the after-tax yield to call for an investor with a 31 percent tax rate?

1. 5.52%

1. 5.90%

1. 6.60%

1. 7.07%

1. 9.52%

[x]. A 15-year bond with a 10 percent semiannual coupon has a par value of \$1,000. The bond may be called after 10 years at a call price of \$1,050. The bond has a nominal yield to call of 6.5 percent. What is the bond’s yield to maturity, stated on a nominal, or annual basis?

1. 5.97%

1. 6.30%

1. 6.75%

1. 6.95%

1. 7.10%

[xi]. You have just been offered a \$1,000 par value bond for \$847.88. The coupon rate is 8 percent, payable annually, and annual interest rates on new issues of the same degree of risk are 10 percent. You want to know how many more interest pay­ments you will receive, but the party selling the bond cannot remember. Can you determine how many interest payments remain?

1. 14

1. 15

1. 12

1. 20

1. 10