Professional Documents
Culture Documents
Full download M Finance 2nd Edition Millon Test Bank all chapter 2024 pdf
Full download M Finance 2nd Edition Millon Test Bank all chapter 2024 pdf
https://testbankfan.com/product/m-finance-2nd-edition-millon-
solutions-manual/
https://testbankfan.com/product/m-finance-3rd-edition-cornett-
test-bank/
https://testbankfan.com/product/m-finance-4th-edition-cornett-
test-bank/
https://testbankfan.com/product/m-finance-3rd-edition-cornett-
solutions-manual/
M Advertising 2nd Edition Arens Test Bank
https://testbankfan.com/product/m-advertising-2nd-edition-arens-
test-bank/
https://testbankfan.com/product/m-information-systems-2nd-
edition-baltzan-test-bank/
https://testbankfan.com/product/m-organizational-behavior-2nd-
edition-mcshane-test-bank/
https://testbankfan.com/product/m-information-systems-2nd-
edition-paige-baltza-test-bank/
https://testbankfan.com/product/m-advertising-2nd-edition-arens-
solutions-manual/
Chapter 07 - Valuing Bonds
Chapter 07
Valuing Bonds
3. Which of these statements answers why bonds are known as fixed income securities?
A. Many investors on fixed incomes buy them.
B. Investors know how much they will receive in interest payments.
C. Investors will not receive their principal when the bond's term is up.
D. All of these
4. Which of the following is a legal contract that outlines the precise terms between the issuer
and the bondholder?
A. debenture
B. enforcement codes
C. indenture
D. prospectus
7-1
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Valuing Bonds
5. Regarding a bond's characteristics, which of the following is the principal loan amount that
the borrower must repay?
A. call premium
B. maturity date
C. par or face value
D. time to maturity value
6. To compensate the bondholders for getting the bond called, the issuer pays which of the
following?
A. call feature
B. call premium
C. coupon rate
D. original issue premium
7-2
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Valuing Bonds
11. Which of the following issues Treasury Inflation Protected Securities (TIPS)?
A. U.S. Treasury
B. Corporations
C. Municipalities
D. Nonprofits
12. Which of the following is true regarding U.S. Government Agency Securities?
A. They carry the federal government's full faith and credit guarantee.
B. They do not carry the federal government's full faith and credit guarantee.
C. They are insured by the FDIC.
D. They are treated the same as U.S. Treasury bonds with regard to the federal government's
full faith and credit guarantee.
13. Which of the following is a debt security whose payments originate from other loans, such
as credit card debt, auto loans, and home equity loans?
A. asset-backed securities
B. credit quality securities
C. debentures
D. junk bonds
14. Which of the following is NOT a factor that determines the coupon rate of a company's
bonds?
A. The amount of uncertainty about whether the company will be able to make all the
payments.
B. The term of the loan.
C. The level of interest rates in the overall economy at the time.
D. All of these are factors that determine the coupon rate of a company's bonds.
7-3
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Valuing Bonds
17. Which of the following terms means that during periods when interest rates change
substantially, bondholders experience distinct gains and losses in their bond investments?
A. credit quality risk
B. interest rate risk
C. liquidity rate risk
D. reinvestment rate risk
18. Which of the following terms means the chance that future interest payments will have to
be reinvested at a lower interest rate?
A. credit quality risk
B. interest rate risk
C. liquidity rate risk
D. reinvestment rate risk
19. Which of the following terms is a comparison of market yields on securities, assuming all
characteristics except maturity are the same?
A. credit quality risk
B. interest rate risk
C. liquidity of interest rate risk
D. term structure of interest rates
7-4
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Valuing Bonds
21. Which of the following is an important advantage to the issuer of a bond with a call
provision?
A. They are able to avoid interest rate risk.
B. They are able to avoid reinvestment rate risk.
C. They are able to reduce their credit risk.
D. They allow for refinancing opportunities.
22. Which of the following is a reason municipal bonds offer lower rates of interest income
for their investors?
A. They are able to avoid interest rate risk.
B. They are able to avoid reinvestment rate risk.
C. They are able to offer reduced credit risk as they are backed by the federal government.
D. They are tax exempt—at least at the federal level.
23. Which of the following terms is the chance that the bond issuer will not be able to make
timely payments?
A. credit quality risk
B. interest rate risk
C. liquidity of interest rate risk
D. term structure of interest rates
24. Which of the following bonds carry significant risk that the issuer will not make current or
future payments?
A. credit quality risk bonds
B. interest rate risk bonds
C. liquidity rate risk bonds
D. junk bonds
7-5
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Valuing Bonds
25. Interest Payments Determine the interest payment for the following three bonds: 5½
percent coupon corporate bond (paid semi-annually), 6.45 percent coupon Treasury note, and
a corporate zero coupon bond maturing in 10 years. (Assume a $1,000 par value.)
A. $5.50, $6.45, $0, respectively
B. $27.50, $32.25, $0, respectively
C. $27.50, $32.25, $100, respectively
D. $55.00, $64.50, $0, respectively
26. Interest Payments Determine the interest payment for the following three bonds: 2½
percent coupon corporate bond (paid semi-annually), 3.15 percent coupon Treasury note, and
a corporate zero coupon bond maturing in 10 years. (Assume a $1,000 par value.)
A. $2.50, $3.15, $0, respectively
B. $12.50, $15.75, $0, respectively
C. $12.50, $15.75, $100, respectively
D. $25.00, $31.50, $0, respectively
27. Interest Payments Determine the interest payment for the following three bonds: 4
percent coupon corporate bond (paid semi-annually), 4.75 percent coupon Treasury note, and
a corporate zero coupon bond maturing in 15 years. (Assume a $1,000 par value.)
A. $4.00, $4.75, $0, respectively
B. $20.00, $23.75, $0, respectively
C. $20.00, $23.75, $150, respectively
D. $40.00, $47.50, $0, respectively
28. Time to Maturity A bond issued by a corporation on June 15, 2007, is scheduled to
mature on June 15, 2017. If today is December 16, 2008, what is this bond's time to maturity?
(Assume annual interest payments.)
A. 1 year, 6 months
B. 8 years
C. 8 years, 6 months
D. 10 years
7-6
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Valuing Bonds
29. Time to Maturity A bond issued by a corporation on May 1, 1999, is scheduled to mature
on May 1, 2019. If today is May 2, 2009, what is this bond's time to maturity? (Assume
annual interest payments.)
A. 9 years
B. 10 years
C. 19 years
D. 20 years
31. Call Premium A 5.5 percent corporate coupon bond is callable in four years for a call
premium of one year of coupon payments. Assuming a par value of $1,000, what is the price
paid to the bondholder if the issuer calls the bond? (Assume annual interest payments.)
A. $55
B. $220
C. $1000
D. $1055
32. Call Premium A 6 percent corporate coupon bond is callable in ten years for a call
premium of one year of coupon payments. Assuming a par value of $1,000, what is the price
paid to the bondholder if the issuer calls the bond?
A. $60
B. $600
C. $1000
D. $1060
7-7
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Valuing Bonds
33. Call Premium A 4.5 percent corporate coupon bond is callable in five years for a call
premium of one year of coupon payments. Assuming a par value of $1,000, what is the price
paid to the bondholder if the issuer calls the bond?
A. $45
B. $225
C. $1000
D. $1045
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
7-8
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Valuing Bonds
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%
7-9
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Valuing Bonds
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%
7-10
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Valuing Bonds
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?
A. $5.10
B. $11.20
C. $16.30
D. $27.69
47. TIPS Capital Return Consider a 3.25% TIPS with an issue CPI reference of 186.7. At
the beginning of this year, the CPI was 197.5 and was at 202.4 at the end of the year. What
was the capital gain of the TIPS in dollars? (Assume semi-annual interest payments and
$1,000 par value.)
A. $4.90
B. $10.80
C. $15.70
D. $26.25
48. TIPS Capital Return Consider a 3.75% TIPS with an issue CPI reference of 183.5. At
the beginning of this year, the CPI was 190.6 and was at 199.4 at the end of the year. What
was the capital gain of the TIPS in percentage terms? (Assume semi-annual interest payments
and $1,000 par value.)
A. 3.75%
B. 4.62%
C. 7.10%
D. 8.80%
7-11
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Valuing Bonds
49. Compute Bond Price Compute the price of a 4.75 percent coupon bond with 15 years left
to maturity and a market interest rate of 6.25 percent. (Assume interest payments are semi-
annual and par value is $1,000.) Is this a discount or premium bond?
A. discount
B. premium
50. Compute Bond Price Compute the price of a 6 percent coupon bond with 10 years left to
maturity and a market interest rate of 8.75 percent. (Assume interest payments are semi-
annual and par value is $1,000.) Is this a discount or premium bond?
A. discount
B. premium
51. Bond Prices and Interest Rate Changes A 6 percent coupon bond with 12 years left to
maturity is priced to offer a 6.5 percent yield to maturity. You believe that in one year, the
yield to maturity will be 6.25 percent. What is the change in price the bond will experience in
dollars? (Assume semi-annual interest payments and $1,000 par value.)
A. $19.67
B. $21.55
C. $25.00
D. $41.22
52. Bond Prices and Interest Rate Changes A 5.5 percent coupon bond with 18 years left to
maturity is priced to offer a 6.25 percent yield to maturity. You believe that in one year, the
yield to maturity will be 5.75 percent. What is the change in price the bond will experience in
dollars? (Assume semi-annual interest payments and $1,000 par value.)
A. $25.00
B. $26.89
C. $53.48
D. $80.37
7-12
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Valuing Bonds
53. Yield to Maturity A 5.75 percent coupon bond with 12 years left to maturity is offered
for sale at $978.83. What yield to maturity is the bond offering? (Assume interest payments
are paid semi-annually and par value is $1,000.)
A. 3.00%
B. 3.09%
C. 5.75%
D. 6.00%
54. Yield to Maturity A 4.25 percent coupon bond with 8 years left to maturity is offered for
sale at $983.36. What yield to maturity is the bond offering? (Assume interest payments are
paid semi-annually and par value is $1,000.)
A. 2.25%
B. 2.36%
C. 4.25%
D. 4.50%
55. Yield to Call A 7.25 percent coupon bond with 25 years left to maturity can be called in 5
years. The call premium is one year of coupon payments. It is offered for sale at $1066.24.
What is the yield to call of the bond? (Assume that interest payments are paid semi-annually
and par value is $1,000.)
A. 3.41%
B. 3.45%
C. 3.51%
D. 6.90%
56. Yield to Call A 4.75 percent coupon bond with 12 years left to maturity can be called in 2
years. The call premium is one year of coupon payments. It is offered for sale at $1037.35.
What is the yield to call of the bond? (Assume that interest payments are paid semi-annually
and par value is $1,000.)
A. 4.60%
B. 4.68%
C. 4.75%
D. 5.05%
7-13
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Valuing Bonds
57. Comparing Bond Yields A client in the 33 percent marginal tax bracket is comparing a
municipal bond that offers a 5 percent yield to maturity and a similar-risk corporate bond that
offers a 6.25 percent yield. Which bond will give the client more profit after taxes?
A. the municipal bond
B. the corporate bond
C. Both give the client equal profits after taxes.
D. There is not enough information given to determine.
58. Comparing Bond Yields A client in the 28 percent marginal tax bracket is comparing a
municipal bond that offers a 3.25 percent yield to maturity and a similar-risk corporate bond
that offers a 4.10 percent yield. Which bond will give the client more profit after taxes?
A. the municipal bond
B. the corporate bond
C. Both give the client equal profits after taxes.
D. There is not enough information given to determine answer.
59. Comparing Bond Yields A client in the 35 percent marginal tax bracket is comparing a
municipal bond that offers a 4.25 percent yield to maturity and a similar-risk corporate bond
that offers a 5.10 percent yield. Which bond will give the client more profit after taxes?
A. the municipal bond
B. the corporate bond
C. Both give the client equal profits after taxes.
D. There is not enough information given to determine answer.
60. TIPS Total Return Reconsider a 3.25% TIPS that was issued with CPI reference of
186.7. The bond is purchased at the beginning of the year (after the interest payment), when
the CPI was 197.5. For the interest in the middle of the year, the CPI was 201.1. Now, at the
end of the year, the CPI is 202.4 and the interest payment has been made. What is the total
return of the TIPS in percentage terms for the year? (Assume semi-annual interest payments
and $1,000 par value.)
A. 1.6%
B. 2.4%
C. 5.8%
D. 9.1%
7-14
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Valuing Bonds
61. Bond Prices and Interest Rate Changes A 6.75 percent coupon bond with 10 years left
to maturity is priced to offer a 6.5 percent yield to maturity. You believe that in one year, the
yield to maturity will be 6.65 percent. If this occurs, what would be the total return of the
bond in percent? (Assume semi-annual interest payments and $1,000 par value.)
A. 5.5%
B. 5.6%
C. 6.6%
D. 6.7%
62. Bond Prices and Interest Rate Changes A 7.25 percent coupon bond with 25 years left
to maturity is priced to offer a 7 percent yield to maturity. You believe that in one year, the
yield to maturity will be 7.15 percent. If this occurs, what would be the total return of the
bond in percent? (Assume semi-annual interest payments and $1,000 par value.)
A. 3.5%
B. 5.3%
C. 7.0%
D. 7.15%
63. Yields of a Bond A 3.25 percent coupon municipal bond has 12 years left to maturity and
has a price quote of 98.75. The bond can be called in 5 years. The call premium is one year of
coupon payments. What is the bond's taxable equivalent yield for an investor in the 35 percent
marginal tax bracket? (Assume interest payments are paid semi-annually and a par value of
$5,000.)
A. 3.38%
B. 5.00%
C. 5.20%
D. 10.12%
7-15
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Valuing Bonds
64. Yields of a Bond A 4.5 percent coupon municipal bond has 10 years left to maturity and
has a price quote of 97.75. The bond can be called in 4 years. The call premium is one year of
coupon payments. What is the bond's taxable equivalent yield for an investor in the 33 percent
marginal tax bracket? (Assume interest payments are paid semi-annually and a par value of
$5,000.)
A. 4.5%
B. 4.78%
C. 7.13%
D. 14.48%
65. Bond Ratings and Prices A corporate bond with a 5.75 percent coupon has 15 years left
to maturity. It has had a credit rating of BB and a yield to maturity of 6.25 percent. The firm
has recently gotten more financially stable and the rating agency is upgrading the bonds to
BBB. The new appropriate discount rate will be 6.00 percent. What will be the change in the
bond's price in dollars? (Assume interest payments are paid semi-annually and a par value of
$1,000.)
A. decrease $22.25
B. increase $22.25
C. decrease $23.72
D. increase $23.72
66. Which of the following was the catalyst for the recent financial crisis?
A. Corruption in the investment banking industry.
B. Widespread layoffs due to illegal alien hiring.
C. Defaults on subprime mortgages.
D. All of these.
7-16
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Valuing Bonds
68. If Zeus Energy bonds are upgraded from BBB- to BBB+, which of the following
statements is true?
A. The current bond price will increase.
B. Interest rates required on new bond issues will increase.
C. The current bond price will decrease.
D. The current bond price will increase and interest rates on new bonds issues will decrease.
69. A 6.5% coupon bond with 12 years left to maturity can be called in 4 years. The call
premium is one year of coupon payments. It is offered for sale at $1,190.25. What is the yield
to call of the bond? (Assume interest payments are paid semi-annually and par value is
$1,000.)
A. 1.48%
B. 2.96%
C. 6.5%
D. 7.23%
70. A 7.5% coupon bond with 16 years left to maturity is offered for sale at $834.92. What
yield to maturity is the bond offering? (Assume interest payments are paid semi-annually and
par value is $1,000.)
A. 4.77%
B. 7.5%
C. 9.54%
D. 10.34%
71. An 8% coupon bond with 15 years to maturity is priced to offer a 9% yield to maturity.
You believe that in one year, the yield to maturity will be 6.5%. What is the change in price
the bond will experience in dollars? (Assume annual interest payments and par value is
$1,000.)
A. $163.92
B. $176.15
C. $198.45
D. $215.82
7-17
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Valuing Bonds
72. Calculate the price of a 6.5% coupon bond with 27 years left to maturity and a market
interest rate of 5%. (Assume interest payments are semiannual and par value is $1,000.) Is this
a discount or premium bond?
A. $982.03; discount
B. $1,010.59; discount
C. $1,220.93; premium
D. $1,315.62; premium
73. Calculate the price of a 6.5% coupon bond with 17 years left to maturity and a market
interest rate of 10.5%. (Assume interest rates are semiannual and par value is $1,000.) Is this a
discount or premium bond?
A. $685.93; discount
B. $791.03; discount
C. $1,051.83; premium
D. $1,176.31; premium
74. Calculate the price of a zero coupon bond that matures in 20 years if the market interest
rate is 8.5%. (Assume annual compounding and a par value of $1,000.)
A. $90.29
B. $195.62
C. $1,195.62
D. $995.62
75. What is the taxable equivalent yield on a municipal bond with a yield to maturity of 4%
for an investor in the 28% tax bracket?
A. 2.88%
B. 3.87%
C. 4.51%
D. 5.56%
7-18
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Valuing Bonds
76. Rank from lowest credit risk to highest credit risk the following bonds, with the same time
to maturity, by their yield to maturity: Treasury bond with yield of 5.55%, IBM bond with
yield of 7.95%, Trump Casino bond with a yield of 9.15%, and Banc Ono bond with a yield
of 6.12%.
A. Treasury, Trump Casino, Banc Ono, IBM
B. Trump Casino, IBM, Banc Ono, Treasury
C. Treasury, Banc Ono, IBM, Trump Casino
D. Trump Casino, Banc Ono, IBM, Treasury
77. Consider a 4.5% TIPS with an issue CPI reference of 187.2. At the beginning of this year,
the CPI was 199.5 and was 213.7 at the end of the year. What was the capital gain of the TIPS
in dollars?
A. $32.73
B. $46.92
C. $62.49
D. $75.85
78. Rank from highest credit risk to lowest credit risk the following bonds, with the same time
to maturity, by their yield to maturity: Treasury bond with yield of 6.55%, IBM bond with
yield of 10.95%, Trump Casino bond with a yield of 9.15%, and Banc Ono bond with a yield
of 9.46%.
A. Treasury, Trump Casino, Banc Ono, IBM
B. Banc Ono, Trump Casino, IBM, Treasury
C. Trump Casino, Treasury, Banc Ono, IBM
D. IBM, Banc Ono, Trump Casino, Treasury
79. Consider the following bond quote: a municipal bond quoted at 101.25. If the municipal
bond has a par value of $5,000, what is the price of the bond in dollars?
A. $5,089.06
B. $5,050.19
C. $5,062.50
D. $5,109.75
7-19
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Valuing Bonds
80. A 3.75% TIPS has an original reference CPI of 183.9. If the current CPI is 214.7, what is
the current interest payment? (Assume semi-annual interest payments and a par value of
$1,000.)
A. $43.78
B. $37.50
C. $21.89
D. $18.75
81. A 5 1/8% TIPS has an original reference CPI of 191.8. If the current CPI is 188.3, what is
the par value of the TIPS?
A. $981.75
B. $1,018.60
C. $992.75
D. $1,042.95
82. A 7.5% coupon bond with 9 years left to maturity is priced to offer a 10.4% yield to
maturity. You believe that in one year, the yield to maturity will be 8%. What is the change in
price the bond will experience in dollars? (Assume interest payments are semiannual and par
value is $1,000.)
A. $97.75
B. $101.50
C. $129.25
D. $137.75
83. A 6.75% coupon bond with 13 years left to maturity can be called in 2 years. The call
premium is one year of coupon payments. It is offered for sale at $919.75. What is the yield to
call of the bond? Assume interest payments are paid semi-annually and par value is $1,000.
A. 12.14%
B. 7.27%
C. 14.54%
D. 8.29%
7-20
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Another random document with
no related content on Scribd:
sur la Colère, sur l’Homme de bien, reproduits plus haut, et la plupart
de ceux qui vont suivre se ressentent de cette préoccupation
instinctive du Tahitien à qui rien n’est plus pénible que de contrarier
l’étranger dans ses discours. Il n’en est pas ainsi des imprécations.
Sans doute pour s’en faire pardonner la rudesse, le conteur ajoute :
« Ce sont là les imprécations des sorciers. Quand on les entend les
proférer, on les tue immédiatement et on les jette à la mer ! »
La facilité avec laquelle les Tahitiens s’injurient encore de nos
jours, la verve grossière qu’ils y mettent, démentent un peu ce
commentaire ajouté après coup, semble-t-il. Tout cela offre l’intérêt
de l’inédit. Les manuscrits que j’ai dépouillés étaient en anglais
quand ils n’étaient pas en vieux tahitien. Dans ce dernier cas il m’a
fallu recourir à M. Barff, interprète en retraite, le seul Européen
capable de déchiffrer un idiome devenu presque étranger aux
indigènes, qui ne parlent plus guère aujourd’hui que ce qu’on appelle
« le tahitien de la plage ».
LA DOULEUR
LE DÉSIR
LA GUERRE
Je reviendrai plus tard sur ces chants de guerre et sur ces récits
de batailles.
XII
Dans les notes que j’ai sous les yeux défilent les uns après les
autres les principaux chefs des arioi. Tous leurs discours se
ressemblent ; ils prennent tous en parlant l’attitude hautaine du coq
auprès de la poule ; ils ont tous leur cochon sacré, leur vêtement
sacré, leur ceinture rouge. Ils ne diffèrent que par le nom. Ils
s’appellent : Grand maître des cérémonies, Petite pirogue avec une
pierre blanche voguant où la mer se brise sur les récifs, etc., etc… A
la longue, il est fatigant de les entendre nommer, avec la même
jactance, leur montagne, leur maison, leur marae et leur rivière.
Passons.
Ces cases des arioi étaient aussi grandes que celles des chefs
de district ou des membres de la famille royale. Ils les construisaient
en commun et se réunissaient pour aller chercher le bois, le
bambou, les feuilles sèches de pandanus dont elles étaient faites.
Cette propension à bâtir a été depuis exploitée pour la construction
des fare hau, maisons communes, des temples et des écoles.
Quelques détails encore. Il y avait quatre classes de personnes à
Tahiti : les rois, les gros-ventres ou vieillards, les sénateurs si l’on
préfère, les arioi et les pêcheurs. Les rois ou chefs avaient autour de
leur maison un mur de pierres posées les unes sur les autres ; les
arioi entouraient leur case d’une barrière en bois de mayoré ; les
pêcheurs se contentaient de barrières formées de petits morceaux
de bois. Quant aux gros-ventres, ils habitaient le marae et servaient
les dieux. Les gros-ventres laissaient croître leurs cheveux. Chaque
classe instruisait la jeunesse à sa façon. Le roi dressait les
domestiques dont il avait besoin. Les gros-ventres éduquaient des
héraults, des messagers, des veilleurs et des porteurs de dieux. Les
arioi instruisaient les jeunes gens pour en faire des acteurs, des
danseurs ou des mimes. Les pêcheurs leur enseignaient la pêche
afin qu’ils pussent à l’âge de puberté devenir des pêcheurs à leur
tour.
Le roi nommait le chef, le roi des arioi, l’arii arioi. La désignation
faite devant l’assemblée, un des premiers parmi les arioi criait :
« Donnons les Jambes noires à un tel ». Si la foule y consentait, les
jambes du nouveau chef étaient tatouées sur l’heure, en public. Ce
roi des arioi était, le plus souvent le parent d’un chef et depuis
longtemps on le destinait à cette haute fonction dont ses fétii et alliés
tiraient un grand profit :
LA VENGEANCE DE TETOHU
PRÊTRE DE NUURUA