Homework answers / question archive / UnansweredQuestion 1 0 / 1 pts A discount bond is a bond in which its present value is greater than its face value

UnansweredQuestion 1 0 / 1 pts A discount bond is a bond in which its present value is greater than its face value

Finance

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UnansweredQuestion 1

0 / 1 pts

A discount bond is a bond in which its present value is greater than its face value.

  

True

   

False

 

 

UnansweredQuestion 2

0 / 1 pts

The supply of loanable funds is a term describing the total net demand for financial capital by users.

  

True

 

False

 

 

UnansweredQuestion 3

0 / 1 pts

The Humphrey-Hawkins Act revised and supplemented the original reasons and goals of the Federal Reserve System. 

  

True

   

False

 

 

UnansweredQuestion 4

0 / 1 pts

Primary markets trade financial instruments once they are issued.

  

True

   

False

 

 

UnansweredQuestion 5

0 / 1 pts

ERM recognizes the importance of managing the combined impact of the full spectrum of risks as an interrelated risk portfolio. 

  

True

   

False

 

 

UnansweredQuestion 6

0 / 1 pts

An increase in wealth of financial market participants will cause, at every interest rate, the supply curve to shift down and to the right. 

  

True

   

False

 

 

UnansweredQuestion 7

0 / 1 pts

The required return rate is the interest rate used to calculate the annual cash flow a bond issuer promises to pay investors. 

  

True

   

False

 

 

UnansweredQuestion 8

0 / 1 pts

The Federal Reserve System consists of 9 FRBs located in major U.S. cities. 

  

True

   

False

 

 

UnansweredQuestion 9

0 / 1 pts

In a direct transfer a corporation sells its stock or debt directly to investors without going through a financial institution. 
  

True

   

False

 

 

UnansweredQuestion 10

0 / 1 pts

Default risk is the risk that a security cannot be sold at a predictable price with low transaction costs at short notice. 

  

True

   

False

 

 

UnansweredQuestion 11

0 / 10 pts

Why is the Treasury Department issuing twenty-year bonds later this year?

Your Answer:

 

 

UnansweredQuestion 12

0 / 16 pts

You are considering purchasing a corporate bond that has an expected rate of return of 10%, 5% coupon rate (paid annually), a $1,000 par value, and has 3 years until maturity. Based on your projections, you will be able to sell the bond at the end of Year 3 for $1100.  Calculate the current market price of the bond.

Your Answer:

 

UnansweredQuestion 13

0 / 16 pts

A bond you are evaluating, but have not purchased, has a 10% coupon rate (paid annually), a $1,000 par value, and is 5 years from maturity. You feel that you will be able to sell the bond at the end of Year 5 for $950.  If the required rate of return on the bond is 5%, what is its present value?

Your Answer:

 

Question 14

13 / 16 pts

DAH, Inc., has issued a 12% bond that is to mature in 9 years. The bond had a $1,000 par value and interest is due to be paid semi-annually.  If your required rate of return is 10%, what price would you be willing to pay for the bond? (13 points) State whether the bond is selling at a premium or at a discount. (3 points)

Your Answer:

 

Question 15

16 / 16 pts

Your client purchased a corporate bond that had a 5% coupon rate (paid annually), a $1,000 par value, and 4 years until maturity. Your client sold the bond at the end of Year 4 for $1200.  Your client had a realized rate of return on the investment of 12%.  Calculate the current market price of the bond.

Your Answer:

 

Question 16

16 / 16 pts

Calculate the value of a bond that is expected to mature in 13 years with a $1,000 face value. The interest coupon rate is 8%, and the required rate of return is 10%.  Interest is paid annually. (13 points) State whether the bond is selling at a premium or at a discount. (3 points)

Your Answer: