The yield to maturity on a bond is currently 9.84 percent. The real rate of retu
ID: 2771688 • Letter: T
Question
The yield to maturity on a bond is currently 9.84 percent. The real rate of return is 3.29 percent. What is the rate of inflation?
6.71 percent
An investment offers a total return of 12.4 percent over the coming year. You believe the total real return will be only 9.7 percent. What do you believe the exact inflation rate will be for the next year?
2.67 percent
Suppose the real rate is 2.45 percent and the inflation rate is 1.8 percent. What rate would you expect to see on a Treasury bill?
3.35 percent
Road Hazards has 12-year bonds outstanding. The interest payments on these bonds are sent directly to each of the individual bondholders. These direct payments are a clear indication that the bonds can accurately be defined as being issued:
In street form.
The MerryWeather Firm wants to raise $29 million to expand its business. To accomplish this, the firm plans to sell 15-year, $1,000 face value zero-coupon bonds. The bonds will be priced to yield 7 percent. What is the minimum number of bonds the firm must sell to raise the $29 million it needs? Use annual compounding.
80,012
412,627
40,006
206,313
29,000
Gugenheim, Inc. offers a 7.25 percent coupon bond with annual payments. The yield to maturity is 4.025 percent and the maturity date is 10 years. What is the market price of a $1,000 face value bond?
$1,261.25
The price sensitivity of a bond increases in response to a change in the market rate of interest as the:
Coupon rate increases.
Coupon rate decreases and the time to maturity increases.
A premium bond that pays $60 in interest annually matures in seven years. The bond was originally issued three years ago at par. Which one of the following statements is accurate in respect to this bond today?
The coupon rate is greater than the current yield.
Redesigned Computers has 6.5 percent coupon bonds outstanding with a current market price of $742. The yield to maturity is 13.2 percent and the face value is $1,000. Interest is paid annually. How many years is it until these bonds mature?
6.16 years
The 7 percent, semiannual coupon bonds offered by House Renovators are callable in two years at $1,054. What is the amount of the call premium on a $1,000 par value bond?
$52
A bond that has only one payment, which occurs at maturity, defines which one of these types of bonds?
Zero coupon.
The 7 percent bonds issued by Modern Kitchens pay interest semiannually, mature in eight years, and have a $1,000 face value. Currently, the bonds sell for $1,032. What is the yield to maturity?
6.92 percent
A bond is quoted at a price of $1,011. This price is referred to as the:
Face value.
Global Exporters wants to raise $29.6 million to expand its business. To accomplish this, it plans to sell 20-year, $1,000 face value, zero coupon bonds. The bonds will be priced to yield 7.75 percent. What is the minimum number of bonds it must sell to raise the money it needs?
110,411
139,800
126,029
154,907
The $1,000 par value bonds of Uptown Tours have a coupon rate of 6.5 and a current price quote of 101.23. What is the current yield?
6.58 percent
The semiannual, 8-year bonds of Alto Music are selling at par and have an effective annual yield of 8.6285 percent. What is the amount of each interest payment if the face value of the bonds is $1,000?
$
A 10-year, 4.5 percent, semiannual coupon bond issued by Tyler Rentals has a $1,000 face value. The bond is currently quoted at 98.7. What is the clean price of this bond if the next interest payment will occur 2 months from today?
41.50
Bert owns a bond that will pay him $75 each year in interest plus a $1,000 principal payment at maturity. What is the $1,000 called?
6.53 percentExplanation / Answer
The yield to maturity on a bond is currently 9.84 percent. The real rate of return is 3.29 percent. What is the rate of inflation?
Rate of inflation = (1+YTM)/(1+real return) -1
Rate of inflation = (1+9.84%)/(1+3.29%) - 1
Rate of inflation = 6.34%
Answer
6.34 percent
An investment offers a total return of 12.4 percent over the coming year. You believe the total real return will be only 9.7 percent. What do you believe the exact inflation rate will be for the next year?
Rate of inflation = (1+Total Return)/(1+total real return) -1
Rate of inflation = (1+12.4%)/(1+9.7%) - 1
Rate of inflation = 2.46%
Answer
2.46 percent
Suppose the real rate is 2.45 percent and the inflation rate is 1.8 percent. What rate would you expect to see on a Treasury bill?
Expect rate on a Treasury bill = (1+real rate)*(1+inflation rate)-1
Expect rate on a Treasury bill = (1+2.45%)*(1+1.8%)-1
Expect rate on a Treasury bill = 4.29%
Answer
4.29 percent
Road Hazards has 12-year bonds outstanding. The interest payments on these bonds are sent directly to each of the individual bondholders. These direct payments are a clear indication that the bonds can accurately be defined as being issued:
Answer
In registered form.
Note :Registered Form :The owner's name and contact information is recorded and kept on file with the company, allowing it to pay the bond's coupon payment to the appropriate person
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.