An n-year bond with annual coupons has the following characteristics:

• The redemption value at maturity is 1890;
• The annual effective yield rate is 6%;
• The book value immediately after the third coupon is 1254.87; and
• The book value immediately after the fourth coupon is 1277.38.

Calculate n.

• 16
• 17
• 18
• 19
• 20

An n-year bond with semiannual coupons has the following characteristics:

• The par value and redemption value are 2500;
• The annual coupon rate is 7% payable semi-annually;
• The annual nominal yield to maturity is 8% convertible semiannually; and
• The book value immediately after the fourth coupon is 8.44 greater than the book value immediately after the third coupon.

Calculate n.

• 6.5
• 7.0
• 9.5
• 12.0
• 14.0

A 1000-par value 30-year bond has an annual coupon rate of 7% paid semiannually. After an initial 10-year period of call protection, the bond is callable immediately following the payment of any of the 20th through the 59th coupons.

• If the bond is called before payment of the 40th coupon, the redemption value is 1250.
• If the bond is called immediately after the payment of any of the 40th through the 59th coupons, the redemption value is 1125.
• If the bond is not called, it will be redeemed at par.

To ensure that the bond will provide at least an annual nominal yield rate of 5% convertible semiannually, it must be assumed that the bond will be called or redeemed immediately after the payment of the nth coupon.

Calculate n.

• 20
• 39
• 40
• 59
• 60

Bond X is a 20-year bond with annual coupons and the following characteristics:

Calculate the maximum purchase price for Bond X that will guarantee an annual effective yield rate of at least 5%.

• 1519
• 1542
• 1570
• 1596
• 1623

A life insurance company invests two million in a 10-year zero-coupon bond and four million in a 30-year zero-coupon bond. The annual effective yield rate for both bonds is 8%. When the 10-year bond matures, the company reinvests the proceeds in another 10-year zero- coupon bond. At that time the bond yield rate is 12% annual effective. After 20 years from the initial investment, the 30-year bond is sold to yield an annual effective rate of 10% to the buyer. The maturity of the second 10-year bond and the sale of the 30-year bond result in a gain of X on the company’s initial investment of six million.

Calculate X.

• 23 million
• 29 million
• 32 million
• 34 million
• 42 million

You are given the following information about a 20-year bond with face amount 7500:

• The bond has an annual coupon rate of 7.4% paid semiannually.
• The purchase price results in an annual nominal yield rate to the investor of 5.3% convertible semiannually.
• The amount for amortization of premium in the fourth coupon payment is 28.31.

Calculate the redemption value of the bond.

• 7660
• 7733
• 7795
• 7879
• 7953

Claire purchases an eight-year callable bond with a 10% annual coupon rate payable semiannually. The bond has a face value of 3000 and a redemption value of 2800. The purchase price assumes the bond is called at the end of the fourth year for 2900, and provides an annual effective yield of 10.0%. Immediately after the first coupon payment is received, the bond is called for 2960. Claire’s annual effective yield rate is i.

Calculate i.

• 9.8%
• 10.1%
• 10.8%
• 11.1%
• 11.8%

You are given the following information about a 20-year bond with face amount 1000:

• The bond has an annual coupon rate of r payable semiannually and is redeemable at par.
• The nominal annual yield rate convertible semiannually is 7.2%.
• The amount for accumulation of discount in the seventh coupon payment is 4.36.

Calculate r.

• 2.1%
• 4.0%
• 4.3%
• 6.0%
• 6.9%

Bond A and Bond B are both annual coupon, five-year, 10,000 par value bonds bought to yield an annual effective rate of 4%.

• Bond A has an annual coupon rate of r%, a redemption value that is 10% below par, and a price of P.
• Bond B has an annual coupon rate of (r+1)%, a redemption value that is 10% above par, and a price of 1.2P

Calculate r %.

• 5.85%
• 6.85%
• 7.85%
• 8.85%
• 9.85%

You are given the following information about an n-year bond, where n > 10:

• The bond pays 8% semiannual coupons and has face amount 1000.
• The bond is redeemable at par.
• The bond is callable at par 5 years after issue or 10 years after issue.
• P is the price to guarantee a yield of 6.8% convertible semiannually and Q is the price to guarantee a yield of 8.8% convertible semiannually.
• |P – Q| = 123.36

Calculate n.

• 11
• 15
• 19
• 22
• 26