Exam 081059RR - Interest Rates and Bond Valuation
1. Which two of the following are the largest categories of fixed-income securities in the U.S.?
I. U.S. government debt
II. corporate debt
III. municipal government debt
IV. real estate mortgage debt
A. I and II only
B. I and IV only
C. III and IV only
D. I and III only
2. How do banks typically quote short-term loan rates?
A. Prime minus the discount rate
B. Prime plus a spread
C. Federal funds rate plus inflation
D. Prime less inflation
3. A bond has a Macaulay duration of 8.7, a yield to maturity of 9.2 percent, a coupon rate of 10 percent, and semiannual interest payments. What's the bond's modified duration?
A. 8.32 years
B. 7.54 years
C. 8.54 years
D. 7.89 years
4. What's the yield to call?
A. The current yield plus the risk-free yield
B. The yield that a bond earns when it's bought back at the earliest possible date
C. The yield that a bond earns when it's held beyond the call date
D. The bonus yield paid to bondholders when a bond is called
5. A bond has 6 years to maturity, a 12 percent coupon, a $1,000 face value, and pays interest semiannually. What's the bond's current price if the yield to maturity is 8.52 percent?
A. $1,161.52
B. $987.19
C. $993.52
D. $1,232.45
6. You own a 7.5%, semiannual coupon bond that matures in 10 years. The par value is $1,000 and the current yield to maturity is 6.5%. What will the percentage change in the price of your bond be if the yield to maturity suddenly increases by 50 basis points?
A.-3.35%
B.-3.47%
C.-3.40%
D.-3.25%
7. What type of yield is the asked yield on a Treasury bill?
A. Bond equivalent yield
B. Zero coupon yield
C. Bid-ask yield
D. Discount yield
8. Which one of the following debt instruments guarantees investors a positive real rate of return?
A. zero-coupon bond
B. TIPS
C. T-bond
D. T-bill
9. A Treasury bill has a face value of $200,000, a price of $198,632.15, and matures in 52 days. What's the asked yield?
A. 5.11%
B. 4.83%
C. 4.98%
D. 5.32%
10. You are analyzing two bonds. Both have semi-annual 6 percent coupons, $1,000 face values, and yields to maturity of 8.1 percent. Bond A matures in 5 years and Bond B matures in 10 years. What's the difference in the current price of these two bonds?
A. $54.81
B. $61.23
C. $57.12
D. $64.87
11. Money market rates are generally one or the other of which two rates?
I. bank discount rate
II. bond equivalent rate
III. annual percentage rate
IV. effective annual rate
A. II and III only
B. II and IV only
C. I and IV only
D. I and III only
12. What is the bid discount used for?
A. To show how much a floor broker is willing to pay to buy a stock on the NYSE
B. To establish the price which the Federal Reserve is willing to pay to buy bonds through open market operations
C. To show what price a NASDAQ market maker will pay to buy a stock
D. To indicate the price Treasury dealers are willing to pay to buy a Treasury bill
13.A Treasury bill has 65 days left to maturity. The bank discount yield on the bill is 4.25 percent. What's the effective annual rate?
A. 4.23%
B. 5.16%
C. 4.37%
D. 4.42%
14. You plan to buy a bond at a quoted price of $987. The bond has a 5.0 percent coupon and pays interest semiannually on March 1 and September 1. What's the dirty price of this bond if today is May 1. (Assume a 360-day year.)
A. $995.33
B. $1021.84
C. $1002.59
D. $987.21
15. Which of the following is a government agency debt obligation?
A. T-bill
B. FNMA debt instrument
C. T-bond
D. Banker's acceptance
16. What are Eurodollars?
A. Banker's acceptances issued by U.S. banks for use overseas
B. European currency that's used to purchase goods in the U.S.
C. U.S dollar-denominated deposits held in a foreign bank
D. Foreign currency deposited in U.S. banks
17. A bond has a face value of $80,000 and matures in 78 days. What's the bank discount yield if the bond is currently selling for $79,211.44?
A. 4.55%
B. 5.68%
C. 4.87%
D. 5.23%
18. What is the bond equivalent yield on a 60-day Treasury bill that has a bank discount yield of 1.79 percent?
A. 2.13%
B. 1.82%
C. 1.58%
D. 1.72%
19. What's the invoice price of a bond called?
A. Dirty price
B. Bid price
C. Clean price
D. Quoted price
20. What term is used to describe a postdated check with payment guaranteed by a bank?
A. Banker's acceptance
B. Commercial paper
C. Construction loan
D. Certificate of deposit
1. Which two of the following are the largest categories of fixed-income securities in the U.S.?
I. U.S. government debt
II. corporate debt
III. municipal government debt
IV. real estate mortgage debt
A. I and II only
B. I and IV only
C. III and IV only
D. I and III only
2. How do banks typically quote short-term loan rates?
A. Prime minus the discount rate
B. Prime plus a spread
C. Federal funds rate plus inflation
D. Prime less inflation
3. A bond has a Macaulay duration of 8.7, a yield to maturity of 9.2 percent, a coupon rate of 10 percent, and semiannual interest payments. What's the bond's modified duration?
A. 8.32 years
B. 7.54 years
C. 8.54 years
D. 7.89 years
4. What's the yield to call?
A. The current yield plus the risk-free yield
B. The yield that a bond earns when it's bought back at the earliest possible date
C. The yield that a bond earns when it's held beyond the call date
D. The bonus yield paid to bondholders when a bond is called
5. A bond has 6 years to maturity, a 12 percent coupon, a $1,000 face value, and pays interest semiannually. What's the bond's current price if the yield to maturity is 8.52 percent?
A. $1,161.52
B. $987.19
C. $993.52
D. $1,232.45
6. You own a 7.5%, semiannual coupon bond that matures in 10 years. The par value is $1,000 and the current yield to maturity is 6.5%. What will the percentage change in the price of your bond be if the yield to maturity suddenly increases by 50 basis points?
A.-3.35%
B.-3.47%
C.-3.40%
D.-3.25%
7. What type of yield is the asked yield on a Treasury bill?
A. Bond equivalent yield
B. Zero coupon yield
C. Bid-ask yield
D. Discount yield
8. Which one of the following debt instruments guarantees investors a positive real rate of return?
A. zero-coupon bond
B. TIPS
C. T-bond
D. T-bill
9. A Treasury bill has a face value of $200,000, a price of $198,632.15, and matures in 52 days. What's the asked yield?
A. 5.11%
B. 4.83%
C. 4.98%
D. 5.32%
10. You are analyzing two bonds. Both have semi-annual 6 percent coupons, $1,000 face values, and yields to maturity of 8.1 percent. Bond A matures in 5 years and Bond B matures in 10 years. What's the difference in the current price of these two bonds?
A. $54.81
B. $61.23
C. $57.12
D. $64.87
11. Money market rates are generally one or the other of which two rates?
I. bank discount rate
II. bond equivalent rate
III. annual percentage rate
IV. effective annual rate
A. II and III only
B. II and IV only
C. I and IV only
D. I and III only
12. What is the bid discount used for?
A. To show how much a floor broker is willing to pay to buy a stock on the NYSE
B. To establish the price which the Federal Reserve is willing to pay to buy bonds through open market operations
C. To show what price a NASDAQ market maker will pay to buy a stock
D. To indicate the price Treasury dealers are willing to pay to buy a Treasury bill
13.A Treasury bill has 65 days left to maturity. The bank discount yield on the bill is 4.25 percent. What's the effective annual rate?
A. 4.23%
B. 5.16%
C. 4.37%
D. 4.42%
14. You plan to buy a bond at a quoted price of $987. The bond has a 5.0 percent coupon and pays interest semiannually on March 1 and September 1. What's the dirty price of this bond if today is May 1. (Assume a 360-day year.)
A. $995.33
B. $1021.84
C. $1002.59
D. $987.21
15. Which of the following is a government agency debt obligation?
A. T-bill
B. FNMA debt instrument
C. T-bond
D. Banker's acceptance
16. What are Eurodollars?
A. Banker's acceptances issued by U.S. banks for use overseas
B. European currency that's used to purchase goods in the U.S.
C. U.S dollar-denominated deposits held in a foreign bank
D. Foreign currency deposited in U.S. banks
17. A bond has a face value of $80,000 and matures in 78 days. What's the bank discount yield if the bond is currently selling for $79,211.44?
A. 4.55%
B. 5.68%
C. 4.87%
D. 5.23%
18. What is the bond equivalent yield on a 60-day Treasury bill that has a bank discount yield of 1.79 percent?
A. 2.13%
B. 1.82%
C. 1.58%
D. 1.72%
19. What's the invoice price of a bond called?
A. Dirty price
B. Bid price
C. Clean price
D. Quoted price
20. What term is used to describe a postdated check with payment guaranteed by a bank?
A. Banker's acceptance
B. Commercial paper
C. Construction loan
D. Certificate of deposit
No comments:
Post a Comment