A 1000 face value 20-year 8% bond with semi-annual coupons is purchased for 1014. The redemption value is 1000. The coupons are reinvested at a nominal annual rate 6%, compounded semi-annually.

Determine the purchaser’s annual effective yield over the 20 year period

• 6.9%
• 7.0%
• 7.1%
• 7.2%
• 7.3%

References

Hlynka, Myron. "University of Windsor Old Tests 62-392 Theory of Interest". web2.uwindsor.ca. Retrieved November 23, 2023.

A 9% bond with a 1000 par value and coupons payable semi-annually is redeemable at maturity for 1100. At a purchase price of P, the bond yields a nominal annual interest rate of 8%, compounded semiannually, and the present value of the redemption amount is 190.

Determine P.

• 1050
• 1085
• 1120
• 1165
• 1215

References

Hlynka, Myron. "University of Windsor Old Tests 62-392 Theory of Interest". web2.uwindsor.ca. Retrieved November 23, 2023.

Matt purchased a 20-year par value bond with semiannual coupons at a nominal annual rate of 6% convertible semiannually at a price of 1722.25. The bond can be called at par value X on any coupon date starting at the end of year 15 after the coupon is paid. The price guarantees that Matt will receive a nominal annual rate of interest convertible semiannually of at least 8%.

Calculate X.

• 1000
• 1059
• 1723
• 1851
• 2148

References

Hlynka, Myron. "University of Windsor Old Tests 62-392 Theory of Interest". web2.uwindsor.ca. Retrieved November 23, 2023.

You purchased a 3 year coupon bond one year ago. Its par value is $1,000 and coupon rate is 6%, paid annually. At the time you purchased the bond, its yield to maturity was 6.5%. Suppose you sell the bond after receiving the first interest payment.

What is the total rate of return from holding the bond for the year if the yield to maturity remains at 6.5% when you sell it?

• 5.5%
• 6%
• 6.25%
• 6.5%
• 6.75%

References

Lo, Andrew W.; Wang, Jiang. "MIT Sloan Finance Problems and Solutions Collection Finance Theory I" (PDF). alo.mit.edu. Retrieved November 30, 2023.

Treasury bonds paying an 8% coupon rate with semiannual payments currently sell at par value. What coupon rate would they have to pay in order to sell at par if they paid their coupons annually?

• 8%
• 8.04%
• 8.08%
• 8.12%
• 8.16%

References

Lo, Andrew W.; Wang, Jiang. "MIT Sloan Finance Problems and Solutions Collection Finance Theory I" (PDF). alo.mit.edu. Retrieved November 30, 2023.

The Wall Street Journal quotes 6.00% for the Treasury bill with a par value of $100,000 due two months from now. What is the effective annual yield on the bill?

• 6%
• 6.05%
• 6.15%
• 6.3%
• 6.5%

References

Lo, Andrew W.; Wang, Jiang. "MIT Sloan Finance Problems and Solutions Collection Finance Theory I" (PDF). alo.mit.edu. Retrieved November 30, 2023.

A 10,000 par value 10-year bond with 8% annual coupons is bought at a premium to yield an annual effective rate of 6%.

Calculate the interest portion of the 7th coupon.

• 632
• 642
• 651
• 660
• 667