FNAN 405 Final Das questions with
verified answers
The market rate on a bond fell from 8.76 percent to 8.73 percent. This is a decline of how many
basis points? - correct answer ✔✔3
What is the current value of a $5,000 face value STRIPS with 6 years to maturity and a yield to
maturity of 8.1 percent?
$3,133.40 - correct answer ✔✔$3,105.02
Based solely on the maturity preference theory, long-term interest rates: - correct answer
✔✔should be higher than short-term rates.
An investment will make one payment of $24,500 nine years from now. What is the current
value of this investment if the nominal rate of return is 4.8 percent? - correct answer
✔✔$16,066.25
Which one of the following is the interest rate that the largest commercial banks charge their
most creditworthy corporate customers for short-term loans? - correct answer ✔✔prime
Which one of the following is defined as U.S. dollar-denominated deposits held in a foreign
bank? - correct answer ✔✔Eurodollars
Which one of the following is the method used to quote interest rates on money market
instruments? - correct answer ✔✔bank discount basis
, The market segmentation theory states that interest rates on debt vary dependent upon market
segments which are segmented based upon which one of the following? - correct answer
✔✔time to maturity
A Treasury bill matures in 68 days and has a bond equivalent yield of 4.05 percent. What is the
effective annual rate? - correct answer ✔✔4.12 percent
A $1,000 face value, 120-day bond is quoted at a bank discount yield of 3.38 percent. What is
the current bond price? - correct answer ✔✔$988.73
A $1,000 face value bond matures in 11 years, pays interest semiannually, and has a 6.5 percent
coupon. The bond currently sells for $1,025. What is the yield to maturity? - correct answer
✔✔6.18 percent
The Country Inn has bonds outstanding with a par value of $1,000 each and a 6.6 percent
coupon. The bonds mature in 7.5 years and pay interest semiannually. What is the current value
of each of these bonds if the yield to maturity is 6.8 percent? - correct answer ✔✔$988.40
Blue Water Homes has 8 percent bonds outstanding that mature in 13 years. The bonds pay
interest semiannually. These bonds have a par value of $1,000 and are callable in 2 years at a
premium of $75. What is the yield to call if the current price is equal to 103.25 percent of par? -
correct answer ✔✔9.66 percent
A $1,000 semiannual coupon bond matures in 15 years, has a coupon rate of 7.5 percent, and a
market price of $982. What is the yield to maturity? - correct answer ✔✔7.70 percent
A bond pays semiannual interest payments of $42.50. What is the coupon rate if the par value is
$1,000? - correct answer ✔✔8.50 percent
The yield value of a 32nd is the change needed in which one of the following to cause a bond's
price to change by 1/32nd? - correct answer ✔✔yield to maturity
verified answers
The market rate on a bond fell from 8.76 percent to 8.73 percent. This is a decline of how many
basis points? - correct answer ✔✔3
What is the current value of a $5,000 face value STRIPS with 6 years to maturity and a yield to
maturity of 8.1 percent?
$3,133.40 - correct answer ✔✔$3,105.02
Based solely on the maturity preference theory, long-term interest rates: - correct answer
✔✔should be higher than short-term rates.
An investment will make one payment of $24,500 nine years from now. What is the current
value of this investment if the nominal rate of return is 4.8 percent? - correct answer
✔✔$16,066.25
Which one of the following is the interest rate that the largest commercial banks charge their
most creditworthy corporate customers for short-term loans? - correct answer ✔✔prime
Which one of the following is defined as U.S. dollar-denominated deposits held in a foreign
bank? - correct answer ✔✔Eurodollars
Which one of the following is the method used to quote interest rates on money market
instruments? - correct answer ✔✔bank discount basis
, The market segmentation theory states that interest rates on debt vary dependent upon market
segments which are segmented based upon which one of the following? - correct answer
✔✔time to maturity
A Treasury bill matures in 68 days and has a bond equivalent yield of 4.05 percent. What is the
effective annual rate? - correct answer ✔✔4.12 percent
A $1,000 face value, 120-day bond is quoted at a bank discount yield of 3.38 percent. What is
the current bond price? - correct answer ✔✔$988.73
A $1,000 face value bond matures in 11 years, pays interest semiannually, and has a 6.5 percent
coupon. The bond currently sells for $1,025. What is the yield to maturity? - correct answer
✔✔6.18 percent
The Country Inn has bonds outstanding with a par value of $1,000 each and a 6.6 percent
coupon. The bonds mature in 7.5 years and pay interest semiannually. What is the current value
of each of these bonds if the yield to maturity is 6.8 percent? - correct answer ✔✔$988.40
Blue Water Homes has 8 percent bonds outstanding that mature in 13 years. The bonds pay
interest semiannually. These bonds have a par value of $1,000 and are callable in 2 years at a
premium of $75. What is the yield to call if the current price is equal to 103.25 percent of par? -
correct answer ✔✔9.66 percent
A $1,000 semiannual coupon bond matures in 15 years, has a coupon rate of 7.5 percent, and a
market price of $982. What is the yield to maturity? - correct answer ✔✔7.70 percent
A bond pays semiannual interest payments of $42.50. What is the coupon rate if the par value is
$1,000? - correct answer ✔✔8.50 percent
The yield value of a 32nd is the change needed in which one of the following to cause a bond's
price to change by 1/32nd? - correct answer ✔✔yield to maturity
