Bond Valuation

A bond with a face value of $1,000 that sells for $1,000 in the market is called a _____ bond. 

• par value

• discount

• premium

• zero coupon

All else constant, a bond will sell at _____ when the yield to maturity is _____ the coupon rate.

• a premium; equal to

• at par; higher than

• at par; less than

• a discount; higher than

The market price of a bond is equal to the present value of the:

• face value minus the present value of the annuity payments.

• annuity payments plus the future value of the face amount.

• face value plus the present value of the annuity payments.

• face value plus the future value of the annuity payments.

Your firm offers a 10-year, zero coupon bond. The yield to maturity is 8.8%. What is the current market price of a $1,000 face value bond?

• $430.24

• $473.26

• $835.56

• $919.12

Ted's Co. offers a zero coupon bond with an 11.3% yield to maturity. The bond matures in 16 years. What is the current price of a $1,000 face value bond?

• $178.78

• $180.33

• $188.36

• $190.09

All else constant, a coupon bond that is selling at a premium, must have:

• a coupon rate that is equal to the yield to maturity.

• a market price that is less than par value.

• semi-annual interest payments.

• a yield to maturity that is less than the coupon rate.

How many pawns are there in a chess game for each player?

• 10

• 12

• 8

• 9