投资学第7版Test-Bank答案

1、perce nt.perce nt.perce nt.Multiple Choice Questions:L The current yield on a bond is equal to _A)annual interest divided by the current market priceB)the yield to maturityC)annual interest divided by the par valueD) the internal rate of returnE)none of the aboveaAnswer: A Difficulty: EasyRationale:

2、 A is current yield and is quoted as such in the financial press.2.If a 7% coupon bond is trading for $, it has a current yield of_A)B)C)D)E)Answer: E Difficulty: EasyRationale: 70/975 =3.If a 6% coupon bond is trading for $, it has a current yield of_A)B)C)D)E)AAnswer: B Difficulty: EasyRationale:

3、60/950 =4.If an 8% coup on bond is tradi ng for $, it has a current yield of _A)B)C)D)E)Answer: A Difficulty: EasyRationale: 80/1025 =5.If a % coupon bond is trading for $, it has a current yield of _percent.A)B)C)D)E)B)%C)%D) %E)none of the above%Answer: A Difficulty: ModerateRationale: FV = 1000,

4、n = 4, PMT = 100, i = 12, PV= ; $100/$ = %7.A coup on bond pays annual interest, has a par value of $1,000, matures in 12 years,has a coupon rate of 11%, and has a yield to maturity of 12% The current yield on this bond is _.A)%B)%C)%D) %E)none of the aboveAnswer: D Difficulty: ModerateRationale: FV

5、 = 1000, n = 12, PMT = 110, i = 12, PV= ; $100/$ = %8.Of the following four investments, _is considered the safestA)commercial paperB)corporate bondsC)U S Agency issuesD) Treasury bondsE)Treasury billsAnswer: E Difficulty: EasyRati on ale: Only Treasury issues are insured by the U S government; the

6、shorter-term the instrument, the safer the instrument.9. To earn a high rati ng from the bond rating agencies, a firm should haveA)a low times interest earned ratioB)a low debt to equity ratioC)a high quick ratioD) B and CE)A and CJAnswer: D Difficulty: EasyRati on ale: High values for the times int

7、erest and quick ratios and a low debt to equity ratio are desirable indicators of safety.10. At issue, coupon bonds typically sell _A)above par value) )B)below parC)at or near par valueD) at a value unrelated to parE)none of the aboveAnswer: C Difficulty: EasyRati on ale: If the inv estme nt banker

8、has appraised the market and the quality of the bond correctly, the bond will sell at or near par (unless interest rates have changed very dramatically and very quickly around the time of issuance)11. Accrued interestA)is quoted in the bond price in the financial pressB)must be paid by the buyer of

9、the bond and remitted to the seller of the bond.C)must be paid to the broker for the inconvenience of selling bonds between maturity datesD) A and BE)A and CAnswer: B Difficulty: ModerateRati on ale: Accrued in terest must be paid by the buyer, but is not included in the quotations page price12. The

10、 invoice price of a bond that a buyer would pay is equal toA)the asked price plus accrued interestjB)the asked price less accrued interestC)the bid price plus accrued interestD) the bid price less accrued interestE)the bid priceAnswer: A Difficulty: EasyRati on ale: The buyer of a bond will buy at t

11、he asked price and will also be invoiced for any accrued interest due to the seller.13. An 8% coupon U S. Treasury note pays interest on May 30 and November 30 and istraded for settlement on August 15. The accrued interest on the $100,000 face value of this note is_A)$YB)$C)$D) $1,E)none of the abov

12、eAnswer: D Difficulty: ModerateRationale: 76/183($4,000) = $1,. Approximation: .08/12*100,000= per month, month * mon ths =14.A coup on bond is reported as havi ng an ask price of 113% ofthe $1,000 par value in the Wall Street Journal. If the last interest payment was made two mon ths ago and the co

13、up on rate is 12%, the inv oice price of the bond will beA)$1,100B)$1,110C)$1,150D) $1,160E)none of the aboveAnswer: C Difficulty: ModerateRationale: $1,130 + $20 (accrued interest) = $1,150.15. The bonds of Ford Motor Compa ny have received a rati ng of D11 by Moodys Then ABCrating indicatesthe bon

14、ds are insuredthe bonds are junk bondsthe bonds are referred to as high yield11 bondsD) A and BE)BandCAnswer: E Difficulty: EasyRati on ale: D ratings are risky bon ds, often called junk bonds (or high yield bonds by those marketi ng such bon ds).16. The bond marketA)can be quite thin.B)primarily co

15、nsists of a network of bond dealers in the over the counter market.C)consists of many investors on any given dayAD) A and B.E)B and C.Answer: D Difficulty: EasyRationale: The bond market, unlike the stock market, can be a very thinly traded market. In addition, most bonds are traded by dealers17. Ce

16、teris paribus, the price and yield on a bond areA)positively relatedB)negatively relatedC)sometimes positivelyand sometimes negatively relatedE)not relatedE)indefinitely relatedAnswer: B Difficulty:EasyRati on ale: Bond prices and yields are inversely related J18. The_is a measure of the average rat

17、e of return an investor will earn 讦 theinvestor buys the bond now and holds until maturityA)current yieldB)dividend yieldC)P/E ratioD) yield to maturityE)discount yieldAnswer: D D讦ficulty: EasyRationale: The current yield is the annual interest as a percent of current market price; the other choices

18、 do not apply to bonds.) )19.The_gives the number of shares for which each convertible bond can beexchangedA)conversion ratioB)current ratioC)P/E ratioD) conversion premiumE)convertible floorAnswer: A Difficulty: EasyRationale: The conversion premium is the amount for which the bond sells above conv

19、ersion value; the price of bond as a straight bond provides the floor. The other terms are not spec 讦 ically releva nt to conv ertible bonds 20.A coup on bond is a bond that _A)pays in terest on a regular basis (typically every six mon ths)B)does not pay interest on a regular basis but pays a lump s

20、um at maturityC)can always be converted into a specific number of shares of common stock in the issuing companyAD) always sells at parE)none of the aboveAnswer: A Difficulty: EasyRati on ale: A coupon bond will pay the coup on rate of interest on a semiannual basis un less the firm defaults on the b

21、ond Convertible bonds are spec讦ic types of bondsD) % and %E)none of the aboveAnswer: A Difficulty: ModerateRationale: Mobil: %-% = %; Lucent Technologies: % - % = %it25. A Treasury bond due in one year has a yield of %; a Treasury bond due in 5 years has a yield of % A bond issued by Xerox due in 5

22、years has a yield of %; a bond issued by Exxon due in one year has a yield of % The default risk premiums on the bonds issued by Exxon and Xerox, respectively, areA)% and %B)% and .7%C)% and %D) % and %E)none of the aboveAnswer: A Difficulty: ModerateRationale: Exxon: %-% = %; Xerox: 7. 9% - % = %26

23、.Floating-rate bonds are designed to _while convertible bonds aredesigned to _.A) minimize the holders1 interest rate risk; give the investor the ability to share in the price appreciation of the companyfs stockB)maximize the holders interest rate risk; give the investor the ability to share in the

24、price appreciation of the companys stockC)minimize the holders1 interest rate risk; give the investor the ability to benefit from interest rate changesD) %E)none of the aboveAnswer: C Difficulty: EasyRati onale: Whe n a bond sells at par value, the coup on rate is equal to the yield to maturity. 30.

25、A coup on bond that pays in terest semi-a nn ually has a par value of $1,000, matures in5 years, and has a yield to maturity of 10% The intrinsic value of the bond today will be_讦 the coup on rate is 8%.A)B)$C)$1,D) $1,E)none of the aboveAnswer: A Difficulty: ModerateRationale: FV = 1000, PMT = 40,

26、n = 10, i = 5, PV =31.A coup on bond that pays in terest semi-a nn ually has a par value of $1,000, matures in5 years, and has a yield to maturity of 10% The intrinsic value of the bond today will be_讦 the coupon rate is 12%A)B)$C)$1,D) $1,E)none of the aboveAnswer: D Difficulty: ModerateRationale:

27、FV = 1000, PMT = 60, n = 10, i = 5, PV =32.A coup on bond that pays in terest of $100 an nually has a par value of $1,000, maturesin 5 years, and is selling today at a $72 discount from par value The yield to maturity on this bond is_A)%B)%C)%D) %E)none of the aboveAnswer: C Difficulty: ModerateRati

28、onale: FV = 1000, PMT = 100, n = 5, PV = -928, i = %33. You purchased an annual interest coupon bond one year ago that now has 6 years remaining until maturity. The coupon rate of interest was 10% and par value was $1,000. At the time you purchased the bond, the yield to maturity was 8%. The amount

29、you paid for this bond one year ago wasA)$1,.B)$1.C)$,.D) $E)$b.Answer: E Difficulty: ModerateRationale: FV = 1000, PMT = 100, n = 7, i = 8, PV =(34.You purchased an annual interest coupon bond one year ago that had 6 yearsremaining to maturity at that time The coupon interest rate was 10% and the p

30、ar value was $1,000. At the time you purchased the bond, the yield to maturity was 8%. If you sold the bond after receiving the first interest payment and the yield to maturity continued to be 8%, your annual total rate of return on holding the bond for that year would have been_A)%B)%C)%!D) %E)none

31、 of the aboveAnswer: C Difficulty: Difficult36.J/ n/ %)/ ABCRationale: FV = 1000, PMT = 100, n = 6, i = 8, PV = ; FV = 1000, PMT = 100, n = 5, i = 8Z PV =; HPR= - + 100) / =8%35. Con sider two bon ds, A and B Both bonds presently are selling at their par value of $1,000. Each pays interest of $120 a

32、nnually. Bond A will mature in 5 years while bond B will mature in 6 years If the yields to maturity on the two bonds change from 12% to 10%,A)both bonds will in crease in value, but bond A will increase more than bond BB)both bonds will increase in value, but bond B will in crease more tha n bond A

33、C)both bonds will decrease in value, but bond A will decrease more than bond BD)both bonds will decrease in value, but bond B will decrease more than bond AE)none of the aboveAnswer: B Difficulty: ModerateRati onale: The Ion ger the maturity, the greater the price change whe n interest rates cha nge

34、.A zero-coupon bond has a yield to maturity of 9% and a par value of $1,000. If the bond matures in 8 years, the bond should sell for a price of_todayD) $E)none of the aboveAnswer: B Difficulty: ModerateRationale: $l,000/8 = $i37. You have just purchased a 10-year zero-coup on bond with a yield to m

35、aturity of 10% and a par value of $1,000. What would your rate of return at the end of the year be if you sell the bond Assume the yield to maturity on the bond is 11% at the time you sell.A)%B)%C)%D) %E)none of the aboveAnswer: D Difficulty: ModerateRationale: $l,000/10 = $; $l,000/9 = $;($- $/$ =

36、%38.A Treasury bill with a par value of $100,000 due one month from now is selling todayfor $99,010. The effective annual yield is_1/ n/ABCD) %E)none of the aboveAnswer: D Difficulty: ModerateRationale: $990/$99,010 = ;12 - =%.39.A Treasury bill with a par value of $100,000 due two mon ths from now

37、is selli ngtoday for $98,039, with an effective annual yield of_A)%B)%C)%D) %E)none of the aboveAnswer: C Difficulty: ModerateRationale: $1,961/598,039 =; 6 -1 = %.40.A Treasury bill with a par value of $100,000 due three mon ths from now is selli ngtoday for $97,087, with an effective annual yield

38、of_A)%B)%C)%D) %E)none of the aboveAnswer: B Difficulty: ModerateRationale: $2,913/$97,087 = ;4- =%J41.A coup on bond pays in terest semi-an nu ally, matures in 5 years, has a par value of$1,000 and a coup on rate of 12%, and an effective annual yield to maturity of % The price the bond should sell

39、for today is_A)$B)$C)$1,D) $1,E)none of the aboveAnswer: D Difficulty: Moderate43.A)B)Q DRationale: 1/2 -1 = 5%, N=10, 1=5%, PMT=60? FV=1000, PV=1,.42. A convertible bond has a par value of $1,000 and a current market price of $850. The current price of the issuing firnYs stock is $29 and the conver

40、sion ratio is 30 shares The boncfs market con version value is _A)$729B)$810C)$870D) $1,000E)none of the aboveAnswer: C Difficulty: EasyRationale: 30 shares X $29/share = $870.A convertible bond has a par value of $1,000 and a current market value of $850.The current price of the issuing firms stock

41、 is $27 and the conversion ratio is 30 shares The bonds conversion premium is_$40$150$190 $200E) none of the aboveAnswer: A Difficulty: Moderate Rationale: $850 - $810 = $40.1Use the following to answer questions 44-47:Consider the following $1,000 par value zero-coupon bonds:Eontl Years to Ivlaitur

42、ity PriceA1$909.09E2$811.62C3$711.78D4$635.5244.The yield to maturity on bond A is _A)10%B)11%C)12%D) 14%E)none of the aboveAnswer: A Difficulty: ModerateRationale: ($1,000 - $/$ = 10%.45.The yield to maturity on bond B is _A)10%B)11%C)12%D)14%E)none of the aboveAnswer: B Difficulty: ModerateiRation

43、ale: ($1,000 -$/$ = ;1/2 - = 11%.46.The yield to maturity on bond C is _A)10%B)11%C)12%D)14%E)none of the aboveAnswer: C Difficulty: ModerateRationale: ($1,000 -$/$ = ;1/3 - = 12%.47.The yield to maturity on bond D is _A)10%B)11%C)12%D)14%E)none of the aboveAnswer: C Difficulty: ModerateRationale: (

44、$1,000 -$/$ = ;1/4 - = 12%.48.A 10% coupon bond, annual payments, 10 years to maturity is callable in 3 years at a call price of $1,100. If the bond is selling today for $975, the yield to call is_A)%B)%C)%D) %E)none of the aboveAnswer: D Difficulty: Moderate(Rationale: FV = 1100, n = 3, PMT = 100,

45、PV = -975, i = %49.A 12% coupon bond, semiannual payments, is callable in 5 years The call price is $1,120; if the bond is selling today for $1,110, what is the yield to callA)%B)%C)%D) %E)none of the aboveAnswer: C Difficulty: ModerateRationale: YTC = FV= 1120, n = 10, PMT = 60, PV = -1,110m i = %,

46、 *2=50.A 10% coupon, annual payments, bond maturing in 10 years, is expected to make all coupon payments, but to pay only 50% of par value at maturity. What is the expected yield on this bond if the bond is purchased for $975A)%B)%C)%.D) %E)none of the aboveAnswer: B Difficulty: ModerateRationale: F

47、V = 500, PMT = 100, n = 10, PV = -975, i = %51.You purchased an annual interest coupon bond one year ago with 6 years remainingto maturity at the time of purchase The coup on interest rate is 10% and par value is $1,000. At the time you purchased the bond, the yield to maturity was 8%. If you sold t

48、he bond after receiving the first interest payment and the bonds yield to maturity had changed to 7%, your annual total rate of return on holding the bond for that year would have been _A)%B)%C)%D) %E)none of the aboveAnswer: D Difficulty: DifficultjRationale: FV = 1000, PMT = 100, n = 6, i = 8, PV

49、= ; FV = 1000, PMT = 100, n = 5, i = 7, PV =; HPR= - + 100) / =%52.The_is used to calculate the present value of a bondA)nominal yieldB)current yieldC)yield to maturityD) yield to callE)none of the aboveAnswer: C Difficulty: EasyRati on ale: Yield to maturity is the discount rate used in the bond va

50、luation formula. For callable bon ds, yield to call is sometimes the more appropriate calculation for the investor (if interest rates are expected to decrease).53.The yield to maturity on a bond is _A) below the coup on rate whe n the bond sells at a discou nt, and equal to the coup on rate when the

51、 bond sells at a premiu m.B)the discount rate that will set the present value of the payments equal to the bond priceC)based on the assumptio n that any payments received are rein vested at the coup on rate D) none of the aboveE)A, B, and C.Answer: B Difficulty: EasyRati onale: The reverse of A is t

52、rue; for C to be true payme nts must be rein vested at the yield to maturity.54.A bond will sell at a discount when _A) the coupon rate is greater than the current yield and the current yield is greater than yield to maturityB)the coupon rate is greater than yield to maturityC)the coupon rate is les

53、s than the current yield and the current yield is greater than the yield to maturityD) the coupon rate is less than the current yield and the current yield is less than yield to maturityE)none of the above is trueAnswer: D Difficulty: ModerateRati on ale: In order for the investor to earn more than

54、the curre nt yield the bond must be selling for a discount. Yield to maturity will be greater than current yield as investor will have purchased the bond at discount and will be receiving the coupon payments over the I讦e of the bond.55. Con sider a 5-year bond with a 10% coup on that has a prese nt

55、yield to maturity of 8%. If interest rates remain constant, one year from now the price of this bond will be_A)higherB)lowerC)rare in the United States today.D)all of the above.E)both A and CAnswer: E Difficulty: ModerateRati on ale: Bearer bonds are not registered so there is no record of ownership

56、 They are rare in the United States today. Tax authorities find registered bonds helpful in tax enforcement but not bearer bonds65.Most corporate bonds are tradedA)on a formal exchange operated by the New York Stock ExchangeB)by the issuing corporation.C)over the counter by bond dealers linked by a

57、computer quotation systemD)on a formal exchange operated by the American Stock Exchange.E)on a formal exchange operated by the Philadelphia Stock Exchange.Answer: C Difficulty: ModerateRati on ale: Most corporate bonds are traded in a loosely orga nized n etwork of bond dealers linked by a computer

58、quote system Only a small proportion is traded on the New York Exchange66. The process of retiring high-coupon debt and issuing new bonds at a lower coupon to reduce interest payments is calledA)deferralB)reissue C)repurchase D)refundingE)none of the aboveAnswer: D Difficulty: ModerateRationale: The

59、 process of refunding refers to calling high-coupon bonds and issuing new, lower coupon debt67.Convertible bondsA) give their holders the ability to share in price appreciation of the underlying stock B)offer lower coupon rates tha n similar non convertible bonds C)offer higher coupon rates tha n si

60、milar non convertible bonds D) both A and B are true.E)both A and C are trueAnswer: D Difficulty: ModerateRati on ale: Convertible bonds offer appreciation pote ntial through the ability to share in price appreciation of the underlying stock but offer a lower coupon and yield than similar nonconvert