chapter-07-interest-rates-and-bond-valuation-4

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101. A Treasury bond is quoted at a price of 106:23
with a 3.50 percent coupon. The bond pays interest semiannually. What is the
current yield on one of these bonds?
A. 3.06 percent
B. 3.19 percent
C. 3.28 percent
D. 3.33 percent
E. 3.38 percent

102. A Treasury bond is quoted as 99:11 asked and
99:09 bid. What is the bid-ask spread in dollars on a $5,000 face value
bond?
A. $0.03
B. $0.63
C. $1.00
D. $3.13
E. $6.25

103. 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. $41.50
B. $42.25
C. $43.15
D. $85.00
E. $86.29

104. A bond that pays interest annually yielded 7.47
percent last year. The inflation rate for the same period was 6.10 percent.
What was the actual real rate of return on this bond for last year?
A. 1.19 percent
B. 1.25 percent
C. 1.29 percent
D. 1.36 percent
E. 1.41 percent

105. Getty Markets has bonds outstanding that pay a 5
percent semiannual coupon, have a 5.28 percent yield to maturity, and a face
value of $1,000. The current rate of inflation is 4.1 percent. What is the real
rate of return on these bonds?
A. 0.86 percent
B. 0.90 percent
C. 1.04 percent
D. 1.13 percent
E. 1.19 percent

106. The outstanding bonds of Winter Time Products
provide a real rate of return of 3.03 percent. The current rate of inflation is
4.68 percent. What is the actual nominal rate of return on these bonds?
A. 7.58 percent
B. 7.33 percent
C. 7.71 percent
D. 7.76 percent
E. 7.85 percent

107. The yield to maturity on a bond is currently 8.46
percent. The real rate of return is 3.22 percent. What is the rate of
inflation?
A. 5.08 percent
B. 5.64 percent
C. 6.24 percent
D. 6.53 percent
E. 6.71 percent

108. A zero coupon bond with a face value of $1,000 is
issued with an initial price of $212.56. The bond matures in 25 years. What is
the implicit interest, in dollars, for the first year of the bond’s life?
A. $12.72
B. $13.58
C. $13.90
D. $15.63
E. $15.89

109. Northern Warehouses wants to raise $11.4 million
to expand its business. To accomplish this, it plans to sell 40-year, $1,000
face value, zero-coupon bonds. The bonds will be priced to yield 8.75 percent.
What is the minimum number of bonds it must sell to raise the $11.4 million it
needs?
A. 210,411
B. 239,800
C. 254,907
D. 326,029
E. 350,448

110. You have won a contest and will receive $2,500 a
year in real terms for the next 3 years. Each payment will be received at the
end of the period with the first payment occurring one year from today. The
relevant nominal discount rate is 6.3 percent and the inflation rate is 4.5
percent. What are your winnings worth today?
A. $7,249
B. $7,367
C. $7,401
D. $7,500
E. $7,838

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