Yield to maturity--semiannual bond Answer: d Diff: M N
110. A bond that matures in 8 years has a 9.5 percent coupon rate, semiannual payments, a face value of $1,000, and an 8.2 percent current yield.
What is the bond’s nominal yield to maturity (YTM)?
a. 7.20%
b. 7.45%
c. 6.55%
d. 6.89%
e. 8.20%
Annual interest payments remaining Answer: b Diff: M
111. You have just been offered a $1,000 par value bond for $847.88. The coupon rate is 8 percent, payable annually, and annual interest rates on new issues of the same degree of risk are 10 percent. You want to know how many more interest payments you will receive, but the party selling the bond cannot remember. Can you determine how many interest payments remain?
a. 14
b. 15
c. 12
d. 20
e. 10
Current yield and capital gains yield Answer: c Diff: M
112. Meade Corporation bonds mature in 6 years and have a yield to maturity of 8.5 percent. The par value of the bonds is $1,000. The bonds have a 10 percent coupon rate and pay interest on a semiannual basis. What are the current yield and capital gains yield on the bonds for this year? (Assume that interest rates do not change over the course of the year.)
a. Current yield = 8.50%; capital gains yield = 1.50%
b. Current yield = 9.35%; capital gains yield = 0.65%
c. Current yield = 9.35%; capital gains yield = -0.85%
d. Current yield = 10.00%; capital gains yield = 0.00%
e. Current yield = 10.50%; capital gains yield = -1.50%
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