FINANCE

34. TIPS Interest and Par Value A 2½ percent TIPS has an original reference CPI of 170.4. If the current CPI is 205.7, what is the current interest payment and par value of the TIPS? (Assume semi-annual interest payments and $1,000 par value.)
A. $1000, $7.16, respectively
B. $1000, $15.09, respectively
C. $1207.16, $7.16, respectively
D. $1207.16, $15.09, respectively

 

35. TIPS Interest and Par Value A 3 3/4 percent TIPS has an original reference CPI of 175.8. If the current CPI is 207.7, what is the current interest payment and par value of the TIPS? (Assume semi-annual interest payments and $1,000 par value.)
A. $1000, $18.75, respectively
B. $1000, $37.50, respectively
C. $1181.46, $22.15, respectively
D. $1181.46, $37.50, respectively

 

36. Bond Quotes Consider the following three bond quotes; a Treasury note quoted at 87:25, and a corporate bond quoted at 102.42, and a municipal bond quoted at 101.45. If the Treasury and corporate bonds have a par value of $1,000 and the municipal bond has a par value of $5,000, what is the price of these three bonds in dollars?
A. $872.50, $1000, $1000, respectively
B. $1000, $1000, $1000, respectively
C. $877.81, $1024.20, $5072.50, respectively
D. $1000, $1024.20, $1001.45, respectively

 

37. Bond Quotes Consider the following three bond quotes; a Treasury note quoted at 102:30, and a corporate bond quoted at 99.45, and a municipal bond quoted at 102.45. If the Treasury and corporate bonds have a par value of $1,000 and the municipal bond has a par value of $5,000, what is the price of these three bonds in dollars?
A. $1002.30, $1000, $1000, respectively
B. $1000, $1000, $5000, respectively
C. $1002.30, $994.50, $5012.25 respectively
D. $1029.38, $994.50, $5122.50, respectively

 

38. Zero Coupon Bond Price Calculate the price of a zero coupon bond that matures in 10 years if the market interest rate is 6 percent. (Assume semi-annual compounding and $1,000 par value.)
A. $553.68
B. $558.66
C. $940.00
D. $1000.00

 

39. Zero Coupon Bond Price Calculate the price of a zero coupon bond that matures in 5 years if the market interest rate is 7.50 percent. (Assume semi-annual compounding and $1,000 par value.)
A. $692.02
B. $696.57
C. $962.50
D. $1000.00

 

40. Current Yield What’s the current yield of a 6 percent coupon corporate bond quoted at a price of 101.70?
A. 5.9%
B. 6.0%
C. 6.1%
D. 10.2%

 

41. Current Yield What’s the current yield of a 5.75 percent coupon corporate bond quoted at a price of 103.05?
A. 5.58%
B. 5.75%
C. 5.93%
D. 17.54%

 

42. Current Yield What’s the current yield of an 8.15 percent coupon corporate bond quoted at a price of 94.30?
A. 4.30%
B. 8.01%
C. 8.15%
D. 8.64%

 

43. Taxable Equivalent Yield What’s the taxable equivalent yield on a municipal bond with a yield to maturity of 3.9 percent for an investor in the 35 percent marginal tax bracket?
A. 1.09%
B. 3.90%
C. 6.00%
D. 11.14%

 

44. Taxable Equivalent Yield What’s the taxable equivalent yield on a municipal bond with a yield to maturity of 4.5 percent for an investor in the 39 percent marginal tax bracket?
A. 1.76%
B. 4.50%
C. 7.38%
D. 11.54%

 

45. Credit Risk and Yield Rank the following bonds in order from lowest credit risk to highest risk all with the same time to maturity, by their yield to maturity: JM Corporate bond with yield of 12.25 percent, IB Corporate bond with yield of 4.49 percent, TC Corporate bond with yield of 8.76 percent, and B&O Corporate bond with a yield of 5.99 percent.
A. JM bond, TC bond, B&O bond, IB bond
B. IB bond, B&O bond, TC bond, JM bond
C. TC bond, B&O bond, IB bond, JM bond
D. JM bond, IB bond, B&O bond, TC bond

 

46. TIPS Capital Return Consider a 2.75% TIPS with an issue CPI reference of 184.2. At the beginning of this year, the CPI was 195.4 and was at 200.5 at the end of the year. What was the capital gain of the TIPS in dollars?

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