Yield to Maturity and Bond Price Numericals

What is the yield to maturity of a bond with a face value of $1000, a current market price of $950, and 5 years to maturity?

• 2.35%

• 6.82%

• 3.91%

• 4.74%

Answer explanation

The yield to maturity of the bond is 4.74%. This is the correct choice as it reflects the current market price and the time to maturity of the bond.

What is the bond price of a 10-year bond with a face value of $1000, a coupon rate of 8%, and a yield to maturity of 6%?

• The bond price is $950.00

• The bond price is $800.00

• The bond price is $1,082.56

• The bond price is $1,200.00

Answer explanation

The bond price of a 10-year bond with a face value of $1000, a coupon rate of 8%, and a yield to maturity of 6% is $1,082.56. This is the correct choice.

What is the coupon rate of a bond with a face value of $500, a current market price of $480, and 3 years to maturity?

• 10%

• 4%

• 6%

• 2%

Answer explanation

The coupon rate of the bond is calculated by dividing the annual coupon payment by the face value of the bond. In this case, the annual coupon payment is $20 (4% of $500), so the coupon rate is 4%.

What is the current yield of a bond that has a face value of $1000, a coupon rate of 6%, and is currently selling for $950?

• 4.89%

• 6.32%

• 5.75%

• 7.21%

Answer explanation

The current yield of a bond is calculated by dividing the annual interest payment by the current market price. In this case, the bond has a coupon rate of 6% which means it pays $60 in interest annually. The current market price is $950. Therefore, the current yield is (60/950) * 100 = 6.32%. This is the correct choice.

What is the bond price of a 5-year bond with a face value of $1000, a coupon rate of 5%, and a yield to maturity of 4%?

• 1054.33

• 950.00

• 1025.50

• 1100.25

Answer explanation

The bond price of a 5-year bond with a face value of $1000, a coupon rate of 5%, and a yield to maturity of 4% is $1054.33. This is the correct choice.

What is the yield to maturity of a bond with a face value of $1000, a current market price of $980, and 7 years to maturity?

• 10.25%

• 6.98%

• 3.50%

• 5.75%

Answer explanation

The yield to maturity of the bond is 6.98%. It is calculated by considering the current market price, face value, and time to maturity of the bond. Among the answer choices, 6.98% is the correct yield to maturity.

What is the bond price of a 15-year bond with a face value of $1000, a coupon rate of 7%, and a yield to maturity of 9%?

• The bond price is $700

• The bond price is $1000

• The bond price is $1200

• The bond price is $847.10

Answer explanation

The bond price of a 15-year bond with a face value of $1000, a coupon rate of 7%, and a yield to maturity of 9% is $847.10. This is the correct choice.

What is the coupon rate of a bond with a face value of $500, a current market price of $520, and 5 years to maturity?

• 10%

• 3.5%

• 2%

• 4%

Answer explanation

The coupon rate of the bond is calculated by dividing the annual coupon payment by the face value of the bond. In this case, the annual coupon payment is $20 (520 - 500) and the face value is $500. Therefore, the coupon rate is 4% (20/500).

What is the current yield of a bond that's as cool as a cucumber, with a face value of $1000, a coupon rate of 4%, and a current market price of $1020?

• 2.75%

• 1.50%

• 5.20%

• 3.92%

Answer explanation

The current yield of the bond is calculated by dividing the annual interest payment by the current market price. In this case, the annual interest payment is $40 (4% of $1000) and the current market price is $1020. Therefore, the current yield is approximately 3.92%.

What is the bond price of an 8-year bond with a face value of $1000, a coupon rate of 6%, and a yield to maturity of 5%?

• The bond price is $1,100.00.

• The bond price is $1,200.00.

• The bond price is $1,079.69.

• The bond price is $950.00.

Answer explanation

The bond price of an 8-year bond with a face value of $1000, a coupon rate of 6%, and a yield to maturity of 5% is $1,079.69. This is the correct choice.