Question 1A 30-year zero-coupon bond that yields 12% percent is issued with a $1000 par value. What is the issuance price of the bond (round to the nearest dollar)?A. $33B. $83C. $8,333D. $3,888 Question 2A 14-year zero-coupon bond was issued with a $1000 par value to yield 12%. What is the approximate market value of the bond?A. $597B. $205C. $275D. $482 Question 3Which of the following does not influence the yield to maturity for a security?A. Required real rate of returnB. Risk free rateC. Business riskD. Yields of similar securities Question 1An increase in the riskiness of a particular security would NOT affect:A. the risk premium for that security.B. the premium for expected inflation.C. the total required return for the security.D. investors’ willingness to buy the security Question 2A ten-year bond, with par value equals $1000, pays 10% annually. If similar bonds are currently yielding 6% annually, what is the market value of the bond? Use semi-annual analysis.A. $1,000B. $1127.50C. $1297.85D. $2549.85 Question 3Which of the following financial assets is likely to have the highest required rate of return based on risk?A. Corporate bondB. Treasury billC. Certificate of DepositD. Common stock Question 1 If the inflation premium for a bond goes up, the price of the bond: A. is unaffected. B. goes down. C. goes up. D. is unpredictable. Question 2The risk premium is likely to be highest for: A. U.S. government bonds. B. corporate bonds. C. gold mining expedition. D. Either b or c Question 3A ten-year bond pays 11% interest on a $1000 face value annually. If it currently sells for $1,195, what is its approximate yield to maturity? A. 9.33% B. 7.94% C. 12.66% D. 8.10% Question 1 The relationship between a bond’s price and the yield to maturity: A. changes at a constant level for each percentage change of yield to maturity. B. is an inverse relationship. C. is a linear relationship. D. has no relationship. Question 2 The longer the time to maturity: A. the greater the price increase from an increase in interest rates. B. the less the price increase from an increase in interest rates. C. the greater the price increase from a decrease in interest rates. D. the less the price decrease from a decrease in interest rates. Question 3 What is the approximate yield to maturity for a seven-year bond that pays 11% interest on a $1000 face value annually if the bond sells for $952? A. 10.5% B. 10.6% C. 11.9% D. 12.0% Question 1 A higher interest rate (discount rate) would: A. reduce the price of corporate bonds. B. reduce the price of preferred stock. C. reduce the price of common stock. D. all of the above Question 2A bond pays 9% yearly interest in semi-annual payments for 6 years. The current yield on similar bonds is 12%. To determine the market value of this bond, you must: A. find the interest factors (IFs) for 12 periods at 12%. B. find the interest factors (IFs) for 6 periods at 9%. C. find the interest factors (IFs) for 12 periods at 6%. D. find the interest factors (IFs) for 6 periods at 6%. Question 3 A 15-year bond pays 11% on a face value of $1,000. If similar bonds are currently yielding 8%, what is the market value of the bond? Use annual analysis. A. Over $1,000 B. Under $1,000 C. Over $1,200 D. not enough information to tell

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