1. An investment provides a 2% return semi-annually, its effective annual rate is (Points : 4) 2%. 4%. 4.02%. 4.04%. 4.53%. 2. A year ago, you invested $10,000 in a savings account that pays an annual...

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Answered Same DayDec 20, 2021

Answer To: 1. An investment provides a 2% return semi-annually, its effective annual rate is (Points : 4) 2%....

Robert answered on Dec 20 2021
126 Votes
1. A coupon bond that pays interest semi-annually has a par value of $1,000, matures in 7 years, and has a yield to maturity of 11%. The intrinsic value of the bond today will be __________ if the coupon rate is 8.8%. (Points : 4)
           $922.78
       $894.51
       $1,075.80
       $1,077.20
       None of these is correct.
Answer:
FV = 1000, PMT = 44, n = 14, i = 5.5, PV = 894.51
    2. A coupon bond that pays interest of $40 semi annually has a par value of $1,000, matures in 4 years, and is selling today at a $36 discount from par value. The yield to maturity on this bond is __________. (Points : 4)
           8.69%
       9.09%
       10.43%
       9.76%
       None of these is correct.
Answer:
FV = 1000, PMT = 40, n = 8, PV = -964, i = 9.09%
    3. A coupon bond that pays interest of $100 annually has a par value of $1,000, matures in 5 years, and is selling today at a $72 discount from par value. The yield to maturity on this bond is __________. (Points : 4)
           6.00%
       8.33%
       12.00%
       60.00%
       None of these is correct.
Answer:
FV = 1000, PMT = 100, n = 5, PV = -928, i = 11.997%
    4. The ______ is a measure of the average rate of return an investor will earn if the investor buys the bond now and holds until maturity....
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