COUPON RATE
A
68. A bond pays semiannual interest payments of $44.50. What is the coupon rate if the par value is
$1,000?
A. 8.90%
B. 4.50%
C. 4.45%
D. 9.00%
E. 14.50%
Level: Easy
Solution:
($44.50 × 2) / $1,000 = 0.089
SEMIANNUAL COUPON
B
69. A bond with par value of $3,000 has a coupon rate of 6.5%. What is the dollar amount of each
semiannual interest payment?
A. $65.00
B. $97.50
C. $185.00
D. $195.00
E. None of the above
Level: Easy
Solution:
The annual coupon dollar = (0.065)($3,000) = $195. Semiannual coupon dollars = $190/2 =
$97.50
CURRENT YIELD
C
70. A bond with a par value of $1,000 has a coupon rate of 7.2 percent and a price of $909.34. What
is the current yield of the bond?
A. 3.96%
B. 8.14%
C. 7.92%
D. 7.63%
E. 7.20%
Level: Easy
Solution:
(0.072)($1,000)/$909.34 = 0.079178
CURRENT YIELD
C
71. A bond with a face value of $1,000 has a current yield of 6.5 percent and a coupon rate of 7
percent. What is the price of the bond?
A. $1,054.80
B. $612.73
C. $1,076.92
D. $1,126.40
E. $538.46
Level: Easy
Solution:
[(0.07)($1,000)] /0.065 = $1,076.923
CURRENT YIELD
A
72. A bond with a par value of $1,000 is selling for $1,057 and has a current yield of 7.4 percent.
What is the coupon rate on the bond?
A. 7.8%
B. 7.1%
C. 6.4%
D. 3.7%
E. 6.8%
Level: Medium
Solution:
Solve (X)($1,000)/$1,057 = 0.074 for X = 0.0782
BOND PRICE
E
73. A bond with 11 years to maturity and a 6 percent coupon rate, a $1,000 face value, has a yield to
maturity of 7.1 percent. What is the current price of the bond? The bond pays interest
semiannually.
A. $952.34
B. $859.90
C. $843.21
D. $873.83
E. $916.99
Level: Medium
Solution:




(.06  $1,000) 
1
$1,000

Bond price 
1
211 
211

.071
 .071 
 .071 
 1 
  1 

2   
2 
 
 ($845 .0704225  .535807917 )  $464 .1920828
 $452 .7954228  $464 .1920828
 $916 .9875056
 $916 .99
BOND PRICE
C
74. What is the current price of a bond matures in 9.5 years, a yield to maturity of 8.2 percent, and a
coupon rate of 7.5 percent? Assume that this bond has a $1,000 face value and pays interest
semiannually.
A. $1,000.00
B. $1,106.18
C. $954.42
D. $968.36
E. $997.54
Level: Medium
Solution:




(.075  $1,000) 
1
$1,000

Bond price 
1
29.5 
29.5

.082
 .082 
 .082 
 1 
 1 


2 
2 
 
 
 ($914 .6341463  .533946108 )  $466 .0538922
 $488 .3653427  $466 .0538922
 $954 .4192349
 $954 .42
BOND PRICE
E
75. A bond has a coupon rate of 8 percent and a yield to maturity of 7.5 percent. What is the market
price of a $1,000 bond if it has 15 years to maturity?
A. $1,073.32
B. $1,004.61
C. $999.16
D. $1,0864.34
E. $1,042.89
Level: Medium
Solution:




(.08  $1,000) 
1
$1,000

Bond price 
1
214 
214

.075
 .075 
 .075 
 1 
 1 


2 
2 
 
 
 ($1,066 .666667  .643275409 )  $356 .7245915
 $686 .1604365  $356 .7245915
 $1,042 .885028
 $1,042 .89
YIELD TO MATURITY
D
76. A $1,000 bond with a coupon rate of 7 percent is currently selling at $1,208. If the bond has 6
years to maturity, what is the yield to maturity? The bond pays interest semiannually.
A. 2.88%
B. 6.14%
C. 5.34%
D. 3.17%
E. 3.44%
Level: Easy
Solution:
Using a financial calculator:
Input:
12
/2 -1,208
N
I/Y
PV
35 1,000
PMT
FV
Solve for:
3.17
YIELD TO MATURITY
B
77. What is the yield to maturity of a $1,000 bond with 14 years to maturity, a coupon rate of 8
percent? The bond is currently quoted at a price of 101.0625 and it pays interest semiannually.
A. 5.05%
B. 7.87%
C. 8.71%
D. 8.53%
E. 4.60%
Level: Easy
Solution:
Current price = 101.0625 percent of $1,000 = 1.010625 × $1,000 = $1,010.625
Using a financial calculator:
Input:
28
/2 -1,010.625 40 1,000
N
I/Y
PV
PMT
FV
Solve for:
7.87
YIELD TO MATURITY
E
78. A $1,000 bond is currently selling for $847.50. With semiannual interest payments, the bond has
a coupon rate of 5 percent and 24.5 years to maturity. What is the bond’s yield to maturity?
Level:
Solution:
A. 3.33%
B. 6.72%
C. 6.88%
D. 3.44%
E. 6.22%
Easy
Using a financial calculator:
Input:
49
/2 -847.50
N
I/Y
PV
Solve for:
6.22
25 1,000
PMT FV
YIELD TO MATURITY
C
79. A $1,000 zero coupon bond is selling for $629.50 and has 7 years to maturity. What is the yield
to maturity of the bond?
A. 3.65%
B. 8.28%
C. 6.84%
D. 7.68%
E. 4.14%
Level: Easy
Solution:
Using a financial calculator:
Input:
Solve for:
7
N
I/Y
6.84
-629.50
PV
PMT
1,000
FV
CALLABLE BOND
E
82. You own a bond that pays semiannual interest payments of $55. The bond is callable in 2 years
at a premium of $100. What is the callable bond price if the yield-to-call is 12.2%?
A. $992.29
B. $1,046.35
C. $1,070.13
D. $1,062.64
E. $1,058.17
Level: Medium
Solution:




$55  2 
1
  $1,000  $100
Callable bond price 
1
2

2
.122   .122    .122  2 2
 1 
  1 

2   
2 
 
 ($901 .6393443  .210888333 )  $868 .0228336
 $190 .1452  $868 .0228
 $1,058 .168
 $1,058 .17
CALLABLE BOND
B
83. You own a bond that is callable in 3.5 years. The bond has a 7% coupon, paying interest
semiannually, with a par value of 41,000. The yield-to-call is 5.6%. What is the call premium if
the bond currently sells for $1,109.88%
A. $60
B. $70
C. $80
D. $90
E. $100
Level: Medium
Solution:




.07  $1,000 
1
  $1,000  CP
$1,109 .88 
1
2

3
.
5
  .056 
  .056  23.5
.056
 1 
 1 


2 
2 
 
 
$1,109 .88  ($1,250  .175770418 )  $824 .2295818  .824229582 CP
$1,109 .88  $1,043 .942604  .824229582 CP
$65.937396  .824229582 CP
CP  $80.00
C
88.
A bond is currently selling for 112% of par and has 16 years to maturity. The bond pays interest
semiannually. The coupon rate is 9.4 percent, and the bond is callable in 4 years at a premium
of $90. What is the yield to call of the bond if it has a par value of $1,000?
A.
B.
C.
D.
8.37%
8.42%
7.45%
7.95%
E. 8.16%
Level: Hard
Solution:
Using a financial calculator:
Input:
8
N
Solve for:
/2 -1,120
I/Y
PV
7.45
45 1,090
PMT FV
YIELD TO CALL
D
89. A bond with 20 years to maturity is callable in 6 years at a call premium of $100. The bond is
currently selling at par and has a coupon rate of 10 percent. What is the yield to call of the bond?
A. 10.63%
B. 11.06%
C. 10.21%
D. 11.21%
E. 10.72%
Level; Medium
Solution:
Using a financial calculator:
Input:
Solve for:
12
N
/2
I/Y
11.21
-1,000
PV
50 1,100
PMT FV