投资学第7版Test Bank答案

1、MultipleChoiceQuestionsThecurrentyieldonabondisequalto.annualinterestdividedbythecurrentmarketpricetheyieldtomaturityannualinterestdividedbytheparvaluetheinternalrateofreturnnoneoftheaboveAnswer:ADifficulty:EasyRationale:Aiscurrentyieldandisquotedassuchinthefinancialpress.Ifa7%couponbondistradingfor

2、$975.00,ithasacurrentyieldofpercent.7.006.537.248.537.18Answer:EDifficulty:EasyRationale:70/975=7.18.Ifa6%couponbondistradingfor$950.00,ithasacurrentyieldofpercent.6.06.6Answer:BDifficulty:EasyRationale:60/950=6.3.Ifan8%couponbondistradingfor$1025.00,ithasacurrentyieldofpercent.7.9

3、8.1Answer:ADifficulty:EasyRationale:80/1025=7.8.Ifa7.5%couponbondistradingfor$1050.00,ithasacurrentyieldofpercent.7.06.7Answer:CDifficulty:EasyRationale:75/1050=7.1.Acouponbondpaysannualinterest,hasaparvalueof$1,000,maturesin4years,hasacouponrateof10%,andhasayieldtomaturityof12%.Thecurrenty

4、ieldonthisbondis.10.65%10.45%10.95%10.52%noneoftheaboveAnswer:ADifficulty:ModerateRationale:FV=1000,n=4,PMT=100,i=12,PV=939.25;$100/$939.25=10.65%.Acouponbondpaysannualinterest,hasaparvalueof$1,000,maturesin12years,hasacouponrateof11%,andhasayieldtomaturityof12%.Thecurrentyieldonthisbondis.10.39%10.

5、43%10.58%10.66%noneoftheaboveAnswer:DDifficulty:ModerateRationale:FV=1000,n=12,PMT=110,i=12,PV=938.06;$100/$938.06=10.66%.Ofthefollowingfourinvestments,mercialpapercorporatebondsU.S.AgencyissuesTreasurybondsTreasurybillsAnswer:EDifficulty:EasyRationale:OnlyTreasuryissuesareinsuredbytheU.S.government

6、;theshorter-termtheinstrument,thesafertheinstrument.Toearnahighratingfromthebondratingagencies,afirmshouldhavealowtimesinterestearnedratioalowdebttoequityratioahighquickratioBandCAandCAnswer:DDifficulty:EasyRationale:Highvaluesforthetimesinterestandquickratiosandalowdebttoequityratioaredesirableindi

7、catorsofsafety.Atissue,couponbondstypicallysell.aboveparvaluebelowparatornearparvalueatavalueunrelatedtoparnoneoftheaboveAnswer:CDifficulty:EasyRationale:Iftheinvestmentbankerhasappraisedthemarketandthequalityofthebondcorrectly,thebondwillsellatornearpar(unlessinterestrateshavechangedverydramaticall

8、yandveryquicklyaroundthetimeofissuance).Accruedinterestisquotedinthebondpriceinthefinancialpress.mustbepaidbythebuyerofthebondandremittedtothesellerofthebond.mustbepaidtothebrokerfortheinconvenienceofsellingbondsbetweenmaturitydates.AandB.AandC.Answer:BDifficulty:ModerateRationale:Accruedinterestmus

9、tbepaidbythebuyer,butisnotincludedinthequotationspageprice.Theinvoicepricoefabondthatabuyerwouldpayisequaltotheaskedpriceplusaccruedinterest.theaskedpricelessaccruedinterest.thebidpriceplusaccruedinterest.thebidpricelessaccruedinterest.thebidprice.Answer:ADifficulty:EasyRationale:Thebuyerofabondwill

10、buyattheaskedpriceandwillalsobeinvoicedforanyaccruedinterestduetotheseller.An8%couponU.S.TreasurynotepaysinterestonMay30andNovember30andistradedforsettlementonAugust15.Theaccruedinterestonthe$100,000facevalueofthisnoteis.$491.80$800.00$983.61$1,661.20noneoftheaboveAnswer:DDifficulty:ModerateRational

11、e:76/183($4,000)=$1,661.20.Approximation:.08/12*100,000=666.67permonth.666.67/month*2.5months=1.666.67.Acouponbondisreportedashavinganaskpriceof113%ofthe$1,000parvalueintheWallStreetJournal.Ifthelastinterestpaymentwasmadetwomonthsagoandthecouponrateis12%,theinvoicepriceofthebondwillbe.$1,100$1,110$1

12、,150$1,160noneoftheaboveAnswer:CDifficulty:ModerateRationale:$1,130+$20(accruedinterest)=$1,150.ThebondsofFordMotorCompanyhavereceivedaratingofDbyMoodys.TheDratingindicatesthebondsareinsuredthebondsarejunkbondsthebondsarereferredtoashighyieldbondsAandBBandCAnswer:EDifficulty:EasyRationale:Dratingsar

13、eriskybonds,oftencalledjunkbonds(orhighyieldbondsbythosemarketingsuchbonds).Thebondmarketcanbequitethin.primarilyconsistsofanetworkofbonddealersintheoverthecountermarket.consistsofmanyinvestorsonanygivenday.AandB.BandC.Answer:DDifficulty:EasyRationale:Thebondmarket,unlikethestockmarket,canbeaverythi

14、nlytradedmarket.Inaddition,mostbondsaretradedbydealers.Ceterisparibus,thepriceandyieldonabondarepositivelyrelated.negativelyrelated.sometimespositivelyandsometimesnegativelyrelated.E)notrelated.E)indefinitelyrelated.Answer:BDifficulty:EasyRationale:Bondpricesandyieldsareinverselyrelated.Theisameasur

15、eoftheaveragerateofreturnaninvestorwillearniftheinvestorbuysthebondnowandholdsuntilmaturity.currentyielddividendyieldP/EratioyieldtomaturitydiscountyieldAnswer:DDifficulty:EasyRationale:Thecurrentyieldistheannualinterestasapercentofcurrentmarketprice;theotherchoicesdonotapplytobonds.Thegivesthenumbe

16、rofsharesforwhicheachconvertiblebondcanbeexchanged.conversionratiocurrentratioP/EratioconversionpremiumconvertiblefloorAnswer:ADifficulty:EasyRationale:Theconversionpremiumistheamountforwhichthebondsellsaboveconversionvalue;thepriceofbondasastraightbondprovidesthefloor.Theothertermsarenotspecificall

17、yrelevanttoconvertiblebonds.Acouponbondisabondthat.paysinterestonaregularbasis(typicallyeverysixmonths)doesnotpayinterestonaregularbasisbutpaysalumpsumatmaturitycanalwaysbeconvertedintoaspecificnumberofsharesofcommonstockintheissuingcompanyalwayssellsatparnoneoftheaboveAnswer:ADifficulty:EasyRationa

18、le:Acouponbondwillpaythecouponrateofinterestonasemiannualbasisunlessthefirmdefaultsonthebond.Convertiblebondsarespecifictypesofbonds.Abondisabondwherethebondholderhastherighttocashinthebondbeforematurityataspecifiedpriceafteraspecificdate.callablecouponputTreasuryzero-couponAnswer:CDifficulty:EasyRa

19、tionale:Anybondmayberedeemedpriortomaturity,butallbondsotherthanputbondsareredeemedatapricedeterminedbytheprevailinginterestrates.Callablebondsarecalledwheninterestratesdeclineappreciably.haveacallpricethatdeclinesastimepasses.arecalledwheninterestratesincreaseappreciably.AandB.BandC.Answer:DDifficu

20、lty:EasyRationale:Callablebondsoftenarerefunded(called)wheninterestratesdeclineappreciably.Thecallpriceofthebond(approximatelyparandoneyearscouponpayment)declinestoparastimepassesandmaturityisreached.ATreasurybonddueinoneyearhasayieldof5.7%;aTreasurybondduein5yearshasayieldof6.2%.AbondissuedbyFordMo

21、torCompanyduein5yearshasayieldof7.5%;abondissuedbyShellOildueinoneyearhasayieldof6.5%.ThedefaultriskpremiumsonthebondsissuedbyShellandFord,respectively,are1.0%and1.2%0.7%and1.5%1.2%and1.0%0.8%and1.3%noneoftheaboveAnswer:DDifficulty:ModerateRationale:Shell:6.5%-5.7%=.8%;Ford:7.5%-6.2%=1.3%.ATreasuryb

22、onddueinoneyearhasayieldof4.6%;aTreasurybondduein5yearshasayieldof5.6%.AbondissuedbyLucentTechnologiesduein5yearshasayieldof8.9%;abondissuedbyMobildueinoneyearhasayieldof6.2%.ThedefaultriskpremiumsonthebondsissuedbyMobilandLucentTechnologies,respectively,are:1.6%and3.3%0.5%and.7%3.3%and1.6%0.7%and0.

23、5%noneoftheaboveAnswer:ADifficulty:ModerateRationale:Mobil:6.2%-4.6%=1.6%;LucentTechnologies:8.9%-5.6%=3.3%.ATreasurybonddueinoneyearhasayieldof6.2%;aTreasurybondduein5yearshasayieldof6.7%.AbondissuedbyXeroxduein5yearshasayieldof7.9%;abondissuedbyExxondueinoneyearhasayieldof7.2%.Thedefaultriskpremiu

24、msonthebondsissuedbyExxonandXerox,respectively,are1.0%and1.2%0.5%and.7%1.2%and1.0%0.7%and0.5%noneoftheaboveAnswer:ADifficulty:ModerateRationale:Exxon:7.2%-6.2%=1.0%;Xerox:7.9%-6.7%=1.2%.Floating-ratebondsaredesignedtowhileconvertiblebondsaredesignedto.minimizetheholdersinterestraterisk;givetheinvest

25、ortheabilitytoshareinthepriceappreciationofthecompanysstockmaximizetheholdersinterestraterisk;givetheinvestortheabilitytoshareinthepriceappreciationofthecompanysstockminimizetheholdersinterestraterisk;givetheinvestortheabilitytobenefitfrominterestratechangesmaximizetheholdersinterestraterisk;giveinv

26、estortheabilitytoshareintheprofitsoftheissuingcompanynoneoftheaboveAnswer:ADifficulty:ModerateRationale:Floatingratebondsallowtheinvestortoearnarateofinterestincometiedtocurrentinterestrates,thusnegatingoneofthemajordisadvantagesoffixedincomeinvestments.Convertiblebondsallowtheinvestortobenefitfromt

27、heappreciationofthestockprice,eitherbyconvertingtostockorholdingthebond,whichwillincreaseinpriceasthestockpriceincreases.Acouponbondthatpaysinterestannuallyissellingatparvalueof$1,000,maturesin5years,andhasacouponrateof9%.Theyieldtomaturityonthisbondis:8.0%8.3%9.0%10.0%noneoftheaboveAnswer:CDifficul

28、ty:EasyRationale:Whenabondsellsatparvalue,thecouponrateisequaltotheyieldtomaturity.Acouponbondthatpaysinterestannuallyhasaparvalueof$1,000,maturesin5years,andhasayieldtomaturityof10%.Theintrinsicvalueofthebondtodaywillbeifthecouponrateis7%.$712.99$620.92$1,123.01$886.28$1,000.00Answer:DDifficulty:Mo

29、derateRationale:FV=1000,PMT=70,n=5,i=10,PV=886.28.Acouponbondthatpaysinterestannually,hasaparvalueof$1,000,maturesin5years,andhasayieldtomaturityof10%.Theintrinsicvalueofthebondtodaywillbeifthecouponrateis12%.$922.77$924.16$1,075.82$1,077.20noneoftheaboveAnswer:CDifficulty:ModerateRationale:FV=1000,

30、PMT=120,n=5,i=10,PV=1075.82Acouponbondthatpaysinterestsemi-annuallyhasaparvalueof$1,000,maturesin5years,andhasayieldtomaturityof10%.Theintrinsicvalueofthebondtodaywillbeifthecouponrateis8%.$922.78$924.16$1,075.80$1,077.20noneoftheaboveAnswer:ADifficulty:ModerateRationale:FV=1000,PMT=40,n=10,i=5,PV=9

31、22.78Acouponbondthatpaysinterestsemi-annuallyhasaparvalueof$1,000,maturesin5years,andhasayieldtomaturityof10%.Theintrinsicvalueofthebondtodaywillbeifthecouponrateis12%.$922.77$924.16$1,075.80$1,077.22noneoftheaboveAnswer:DDifficulty:ModerateRationale:FV=1000,PMT=60,n=10,i=5,PV=1077.22Acouponbondthat

32、paysinterestof$100annuallyhasaparvalueof$1,000,maturesin5years,andissellingtodayata$72discountfromparvalue.Theyieldtomaturityonthisbondis.6.00%8.33%12.00%60.00%noneoftheaboveAnswer:CDifficulty:ModerateRationale:FV=1000,PMT=100,n=5,PV=-928,i=11.997%Youpurchasedanannualinterestcouponbondoneyearagothat

33、nowhas6yearsremaininguntilmaturity.Thecouponrateofinterestwas10%andparvaluewas$1,000.Atthetimeyoupurchasedthebond,theyieldtomaturitywas8%.Theamountyoupaidforthisbondoneyearagowas$1,057.50.$1,075.50.$1,088.50.$1.092.46.$1,104.13.Answer:EDifficulty:ModerateRationale:FV=1000,PMT=100,n=7,i=8,PV=1104.13Y

34、oupurchasedanannualinterestcouponbondoneyearagothathad6yearsremainingtomaturityatthattime.Thecouponinterestratewas10%andtheparvaluewas$1,000.Atthetimeyoupurchasedthebond,theyieldtomaturitywas8%.Ifyousoldthebondafterreceivingthefirstinterestpaymentandtheyieldtomaturitycontinuedtobe8%,yourannualtotalr

35、ateofreturnonholdingthebondforthatyearwouldhavebeen7.00%7.82%8.00%11.95%noneoftheaboveAnswer:CDifficulty:DifficultRationale:FV=1000,PMT=100,n=6,i=8,PV=1092.46;FV=1000,PMT=100,n=5,i=8,PV=1079.85;HPR=(1079.85-1092.46+100)/1092.46=8%Considertwobonds,AandB.Bothbondspresentlyaresellingattheirparvalueof$1

36、,000.Eachpaysinterestof$120annually.BondAwillmaturein5yearswhilebondBwillmaturein6years.Iftheyieldstomaturityonthetwobondschangefrom12%to10%,.bothbondswillincreaseinvalue,butbondAwillincreasemorethanbondBbothbondswillincreaseinvalue,butbondBwillincreasemorethanbondAbothbondswilldecreaseinvalue,butbo

37、ndAwilldecreasemorethanbondBbothbondswilldecreaseinvalue,butbondBwilldecreasemorethanbondAnoneoftheaboveAnswer:BDifficulty:ModerateRationale:Thelongerthematurity,thegreaterthepricechangewheninterestrateschange.Azero-couponbondhasayieldtomaturityof9%andaparvalueof$1,000.Ifthebondmaturesin8years,thebo

38、ndshouldsellforapriceoftoday.422.41$501.87$513.16$483.49noneoftheaboveAnswer:BDifficulty:ModerateRationale:$1,000/(1.09)8=$501.87Youhavejustpurchaseda10-yearzero-couponbondwithayieldtomaturityof10%andaparvalueof$1,000.Whatwouldyourrateofreturnattheendoftheyearbeifyousellthebond?Assumetheyieldtomatur

39、ityonthebondis11%atthetimeyousell.10.00%20.42%13.8%1.4%noneoftheaboveAnswer:DDifficulty:ModerateRationale:$1,000/(1.10)10=$385.54;$1,000/(1.11)9=$390.92;($390.92-$385.54)/$385.54=1.4%.ATreasurybillwithaparvalueof$100,000dueonemonthfromnowissellingtodayfor$99,010.Theeffectiveannualyieldis.12.40%12.55

40、%12.62%12.68%noneoftheaboveAnswer:DDifficulty:ModerateRationale:$990/$99,010=0.01;(1.01)12-1.0=12.68%.ATreasurybillwithaparvalueof$100,000duetwomonthsfromnowissellingtodayfor$98,039,withaneffectiveannualyieldof.12.40%12.55%12.62%12.68%noneoftheaboveAnswer:CDifficulty:ModerateRationale:$1,961/$98,039

41、=0.02;(1.02)6-1=12.62%.ATreasurybillwithaparvalueof$100,000duethreemonthsfromnowissellingtodayfor$97,087,withaneffectiveannualyieldof.12.40%12.55%12.62%12.68%noneoftheaboveAnswer:BDifficulty:ModerateRationale:$2,913/$97,087=0.03;(1.03)4-1.00=12.55%.Acouponbondpaysinterestsemi-annually,maturesin5year

42、s,hasaparvalueof$1,000andacouponrateof12%,andaneffectiveannualyieldtomaturityof10.25%.Thepricethebondshouldsellfortodayis.$922.77$924.16$1,075.80$1,077.20noneoftheaboveAnswer:DDifficulty:ModerateRationale:(1.1025)1/2-1=5%,N=10,I=5%,PMT=60,FV=1000,PV=1,077.22.Aconvertiblebondhasaparvalueof$1,000andac

43、urrentmarketpriceof$850.Thecurrentpriceoftheissuingfirmsstockis$29andtheconversionratiois30shares.Thebondsmarketconversionvalueis.$729$810$870$1,000noneoftheaboveAnswer:CDifficulty:EasyRationale:30sharesX$29/share=$870.Aconvertiblebondhasaparvalueof$1,000andacurrentmarketvalueof$850.Thecurrentpriceo

44、ftheissuingfirmsstockis$27andtheconversionratiois30shares.Thebondsconversionpremiumis.TOC o 1-5 h z$40$150$190$200noneoftheaboveAnswer:ADifficulty:ModerateRationale:$850-$810=$40.Usethefollowingtoanswerquestions44-47:Considerthefollowing$1,000parvaluezero-couponbonds:BondYearstoMaturityPriceA1$909.0

45、9B2JE11.62C.3-$711.7SD4TheyieldtomaturityonbondAis10%11%12%14%noneoftheaboveAnswer:ADifficulty:ModerateRationale:($1,000-$909.09)/$909.09=10%.TheyieldtomaturityonbondBis.10%11%12%14%noneoftheaboveAnswer:BDifficulty:ModerateRationale:($1,000-$811.62)/$811.62=0.2321;(1.2321)1/2-1.0=11%.Theyieldtomatur

46、ityonbondCis.A)10%B)11%C)12%D)14%E)noneoftheaboveAnswer:CDifficulty:ModerateRationale:($1,000-$711.78)/$711.78=0.404928;(1.404928)1/3-1.0=12%.TheyieldtomaturityonbondDis.10%11%12%14%noneoftheaboveAnswer:CDifficulty:ModerateRationale:($1,000-$635.52)/$635.52=0.573515;(1.573515)1/4-1.0=12%.A10%couponb

47、ond,annualpayments,10yearstomaturityiscallablein3yearsatacallpriceof$1,100.Ifthebondissellingtodayfor$975,theyieldtocallis10.26%10.00%9.25%13.98%noneoftheaboveAnswer:DDifficulty:ModerateRationale:FV=1100,n=3,PMT=100,PV=-975,i=13.98%.A12%couponbond,semiannualpayments,iscallablein5years.Thecallpriceis

48、$1,120;ifthebondissellingtodayfor$1,110,whatistheyieldtocall?12.03%.10.86%.10.95%.9.14%.noneoftheabove.Answer:CDifficulty:ModerateRationale:YTC=FV=1120,n=10,PMT=60,PV=-1,110mi=5.48%,5.48*2=10.95A10%coupon,annualpayments,bondmaturingin10years,isexpectedtomakeallcouponpayments,buttopayonly50%ofparvalu

49、eatmaturity.Whatistheexpectedyieldonthisbondifthebondispurchasedfor$975?10.00%.6.68%.11.00%.8.68%.noneoftheabove.Answer:BDifficulty:ModerateRationale:FV=500,PMT=100,n=10,PV=-975,i=6.68%Youpurchasedanannualinterestcouponbondoneyearagowith6yearsremainingtomaturityatthetimeofpurchase.Thecouponinterestr

50、ateis10%andparvalueis$1,000.Atthetimeyoupurchasedthebond,theyieldtomaturitywas8%.Ifyousoldthebondafterreceivingthefirstinterestpaymentandthebondsyieldtomaturityhadchangedto7%,yourannualtotalrateofreturnonholdingthebondforthatyearwouldhavebeen.7.00%8.00%9.95%11.95%noneoftheaboveAnswer:DDifficulty:Dif

51、ficultRationale:FV=1000,PMT=100,n=6,i=8,PV=1092.46;FV=1000,PMT=100,n=5,i=7,PV=1123.01;HPR=(1123.01-1092.46+100)/1092.46=11.95%.Theisusedtocalculatethepresentvalueofabond.nominalyieldcurrentyieldyieldtomaturityyieldtocallnoneoftheaboveAnswer:CDifficulty:EasyRationale:Yieldtomaturityisthediscountrateu

52、sedinthebondvaluationformula.Forcallablebonds,yieldtocallissometimesthemoreappropriatecalculationfortheinvestor(ifinterestratesareexpectedtodecrease).Theyieldtomaturityonabondis.belowthecouponratewhenthebondsellsatadiscount,andequaltothecouponratewhenthebondsellsatapremium.thediscountratethatwillset

53、thepresentvalueofthepaymentsequaltothebondprice.basedontheassumptionthatanypaymentsreceivedarereinvestedatthecouponrate.noneoftheabove.A,B,andC.Answer:BDifficulty:EasyRationale:ThereverseofAistrue;forCtobetruepaymentsmustbereinvestedattheyieldtomaturity.Abondwillsellatadiscountwhen.thecouponrateisgr

54、eaterthanthecurrentyieldandthecurrentyieldisgreaterthanyieldtomaturitythecouponrateisgreaterthanyieldtomaturitythecouponrateislessthanthecurrentyieldandthecurrentyieldisgreaterthantheyieldtomaturitythecouponrateislessthanthecurrentyieldandthecurrentyieldislessthanyieldtomaturitynoneoftheaboveistrue.

55、Answer:DDifficulty:ModerateRationale:Inorderfortheinvestortoearnmorethanthecurrentyieldthebondmustbesellingforadiscount.Yieldtomaturitywillbegreaterthancurrentyieldasinvestorwillhavepurchasedthebondatdiscountandwillbereceivingthecouponpaymentsoverthelifeofthebond.Considera5-yearbondwitha10%coupontha

56、thasapresentyieldtomaturityof8%.Ifinterestratesremainconstant,oneyearfromnowthepriceofthisbondwillbe.higherlowerthesamecannotbedetermined$1,000Answer:BDifficulty:ModerateRationale:Thisbondisapremiumbondasinterestrateshavedeclinedsincethebondwasissued.Ifinterestratesremainconstant,thepriceofapremiumb

57、onddeclinesasthebondapproachesmaturity.Abondhasaparvalueof$1,000,atimetomaturityof20years,acouponrateof10%withinterestpaidannually,acurrentpriceof$850andayieldtomaturityof12%.Intuitivelyandwithouttheusecalculations,ifinterestpaymentsarereinvestedat10%,therealizedcompoundyieldonthisbondmustbe.10.00%1

58、0.9%12.0%12.4%noneoftheaboveAnswer:BDifficulty:DifficultRationale:Inordertoearnyieldtomaturity,thecouponsmustbereinvestedattheyieldtomaturity.However,asthebondissellingatdiscounttheyieldmustbehigherthanthecouponrate.Therefore,Bistheonlypossibleanswer.Abondwitha12%coupon,10yearstomaturityandsellingat

59、88hasayieldtomaturityof.over14%between13%and14%between12%and13%between10%and12%lessthan12%Answer:ADifficulty:ModerateRationale:YTM=14.33%.Usingsemiannualcompounding,a15-yearzerocouponbondthathasaparvalueof$1,000andarequiredreturnof8%wouldbepricedatapproximately.$308$315$464$555noneoftheaboveAnswer:A

60、Difficulty:ModerateRationale:FV=1000,n=30,I=4,PV=308.32Theyieldtomaturityofa20-yearzerocouponbondthatissellingfor$372.50withavalueatmaturityof$1,000is.5.1%8.8%10.8%13.4%noneoftheaboveAnswer:ADifficulty:ModerateRationale:$1,000/($372.501/20-1=5.1%.Whichoneofthefollowingstatementsaboutconvertiblesistr