You have decided to invest in Bond X, an n-year bond with semi-annual coupons and the following characteristics:

• Par value is 1000.
• The ratio of the semi-annual coupon rate, r, to the desired semi-annual yield rate, i, is 1.03125.
• The present value of the redemption value is 381.50.

Given [math](1+i)^{-n} = 0.5889[/math], calculate the price of bond X.

• 1019
• 1029
• 1050
• 1055
• 1072

You are given the following information with respect to a bond:

• par value: 1000
• term to maturity: 3 years
• annual coupon rate: 6% payable annually

You are also given that the one, two, and three year annual spot interest rates are 7%, 8%, and 9% respectively.

Calculate the value of the bond.

• 906
• 926
• 930
• 950
• 1000

You are given the following information with respect to a bond:

• par value: 1000
• term to maturity: 3 years
• annual coupon rate: 6% payable annually

You are also given that the one, two, and three year annual spot interest rates are 7%, 8%, and 9% respectively. The bond is sold at a price equal to its value.

Calculate the annual effective yield rate for the bond i.

• 8.1%
• 8.3%
• 8.5%
• 8.7%
• 8.9%

Bill buys a 10-year 1000 par value bond with semi-annual coupons paid at an annual rate of 6%. The price assumes an annual nominal yield of 6%, compounded semi-annually. As Bill receives each coupon payment, he immediately puts the money into an account earning interest at an annual effective rate of i. At the end of 10 years, immediately after Bill receives the final coupon payment and the redemption value of the bond, Bill has earned an annual effective yield of 7% on his investment in the bond.

Calculate i.

• 9.50%
• 9.75%
• 10.00%
• 10.25%
• 10.50%

Matt purchased a 20-year par value bond with an annual nominal coupon rate of 8% payable 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 lowest yield rate that Matt can possibly receive is a nominal annual interest rate of 6% convertible semiannually.

Calculate X.

• 1400
• 1420
• 1440
• 1460
• 1480

Toby purchased a 20-year par value bond with semiannual coupons of 40 and a redemption value of 1100. The bond can be called at 1200 on any coupon date prior to maturity, starting at the end of year 15.

Calculate the maximum price of the bond to guarantee that Toby will earn an annual nominal interest rate of at least 6% convertible semiannually.

• 1251
• 1262
• 1278
• 1286
• 1295

Sue purchased a 10-year par value bond with an annual nominal coupon rate of 4% payable semiannually at a price of 1021.50. The bond can be called at par value X on any coupon date starting at the end of year 5. The lowest yield rate that Sue can possibly receive is an annual nominal rate of 6% convertible semiannually.

Calculate X.

• 1120
• 1140
• 1160
• 1180
• 1200

Mary purchased a 10-year par value bond with an annual nominal coupon rate of 4% payable semiannually at a price of 1021.50. The bond can be called at 100 over the par value of 1100 on any coupon date starting at the end of year 5 and ending six months prior to maturity.

Calculate the minimum yield that Mary could receive, expressed as an annual nominal rate of interest convertible semiannually.

• 4.7%
• 4.9%
• 5.1%
• 5.3%
• 5.5%

A liability consists of a series of 15 annual payments of 35,000 with the first payment to be made one year from now. The assets available to immunize this liability are five-year and ten-year zero-coupon bonds. The annual effective interest rate used to value the assets and the liability is 6.2%. The liability has the same present value and duration as the asset portfolio.

Calculate the amount invested in the five-year zero-coupon bonds.

• 127,000
• 167,800
• 208,600
• 247,900
• 292,800

A 40-year bond is purchased at a discount. The bond pays annual coupons. The amount for accumulation of discount in the 15th coupon is 194.82. The amount for accumulation of discount in the 20th coupon is 306.69.

Calculate the amount of discount in the purchase price of this bond.

• 13,635
• 13,834
• 16,098
• 19,301
• 21,135