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interest payment was made two months ago and the coupon rate is 12%, the invoice price of the bond will be ____________.

A)$1,100

B)$1,110

C)$1,150

D)$1,160

E)none of the above

21.The yield to maturity on a bond is ________.

A)below the coupon rate when the bond sells at a discount, and equal to the coupon rate when the bond sells at a premium.

B)the discount rate that will set the present value of the payments equal to the bond price.

C)based on the assumption that any payments received are reinvested at the coupon rate.

D)none of the above.

E)a, b, and c.

22.A bond has a par value of $1,000, a time to maturity of 20 years, a coupon rate of 10% with interest paid annually, a current price of $850 and a yield to maturity of 12%. Intuitively and without the use calculations, if interest payments are reinvested at 10%, the realized compound yield on this bond must be ________.

A)10.00%

B)10.9%

C)12.0%

D)12.4%

E)none of the above

23.An 8% coupon U. S. Treasury note pays interest on May 30 and November 30 and is

traded for settlement on August 15.  The accrued interest on the $100,000 face value of  this note is _________.

A)$491.80

B)$800.00

C)$983.61

D)$1,661.20

E)none of the above

24.The bond indenture includes

A)the coupon rate of the bond.

B)the par value of the bond.

C)the maturity date of the bond.

D)all of the above.

E)none of the above.

25.A Treasury bond quoted at 107:16 107:18 has a bid price of _______ and an asked price of _____.

A)$107.16, $107.18

B)$1,071.60, $1,071.80

C)$1,075.00, $1,075.63

D)$1,071.80, $1,071.60

E)$1,070.50, $1,070.56

26.The invoice price of a bond that a buyer would pay is equal to

A)the asked price plus accrued interest.

B)the asked price less accrued interest.

C)the bid price plus accrued interest.

D)the bid price less accrued interest.

E)the bid price.

27.Most corporate bonds are traded

A)on a formal exchange operated by the New York Stock Exchange.

B)by the issuing corporation.

C)over the counter by bond dealers linked by a computer quotation system.

D)on a formal exchange operated by the American Stock Exchange.

E)on a formal exchange operated by the Philadelphia Stock Exchange.

Essay Question 2. (10 points)

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