1. What is the yield-to-maturity of a 10-year maturity and $1,000 par value bond with an 8% coupon interest rate if it is selling for $950.08? Assume that interest is paid annually.

8%

8.77%

9.5%

7.5%

2. What is the market value of a 15-year maturity and $1,000 par value bond with a 9% coupon interest rate? Assume that the investor’s required rate of return from the bond is 8%. Assume that interest is paid semiannually.

$1,000

$870.25

$1,086.46

$1,284.25

3. A 15-year, 12% coupon, $1,000 par value bond is selling for $1,345.84 with an 8% yield to maturity. It can be called after 10 years at $1,080. What is the bond’s annual Yield-to-Call? Assume that the bond is paying semiannual interest.

7.56%

8.00%

8.56%

9.56%

4. The shorter the time remaining to maturity, the stronger will be the volatility in the bond’s market price when interest rates change?

True

False