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1) A ten-year bond, with par value equals $1000, pays 10 percent annually

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1) A ten-year bond, with par value equals $1000, pays 10 percent annually. If similar bonds are currently yielding 6 percent annually, what is the market value of the bond?  Use semi-annual analysis.

1. 1. $1000.00
   2. $1127.50
   3. $1297.85
   4. $2549.85
2. A 14-year zero-coupon bon was issued with a $1000 par value to yield 12 percent.  What is the approximate market value of the bond?
   1. $597
   2. $205
   3. $275
   4. $482
3. A ten-year bond pays 11 percent interest on a $1000 face value annually. If it currently sells for $1195, what is its approximate yield to maturity?
4. The longer the time to maturity the:
   1. Greater the price increase from an increase in interest rates.
   2. Less the price increase from an increase in interest rates.
   3. Greater the price increase from a decrease in interest rates.
   4. Less the price decrease from a decrease in interest rates.
5. A bond pays 9 percent yearly interest in semi-annual payments for 6 years. The current yield on similar bonds is 12 percent.  To Determine the market value of this bond, you much find the interest factors(Ifs) for:

6. If expected dividends grow at 8 percent and the appropriate discount rate is 12 percent, what is the value of a stock with an expected dividend of $2.33?
   1. $62.88
   2. $19.41
   3. $29.12
   4. $58.25
7. Market Enterprises would like to issue bonds and needs to determine the approximate rate it would need to pay investors.  A firm with similar risk recently issue bonds with the following features: a 7 percent coupon rate, 20 years until maturity, and a current price of $1,150.  At what rate would Market Enterprises expect to issue its bonds, assuming annual interest payments?
   1. 5.7  %
   2. 5.9  %
   3. 7  %
   4. 7.1  %
8. Star Corp. issued bonds 2 years ago with a 9 percent coupon rate.  Its bonds are currently trading for $928 in the market.  Which of the following most likely has occurred since the time of issue?
   1. Interest rates decreased
   2. Inflation increased
   3. Risk decreased
   4. Real rates of return decreased
9. Doug has been approached by his broker to purchase a bond for $850.  He believes the fond should yield 10 percent.  The bond pays 7 Percent annual coupon rate and has 12 years left until maturity.  What should Doug’s analysis of the bond indicate to him?
   1. The bond is undervalued; purchase.
   2. The bond is undervalued; do not purchase.
   3. The bond is overvalued; purchase.
   4. The bond is overvalued; do not purchase