Bond Assignment

What is the maturity of a bond?

• The date when the bond matures and the principal is repaid

• The interest rate paid annually

• The initial investment amount

• The market value of the bond

At the end of the maturity period, what do you receive back?

• Initial investment

• Only interest

• Only the coupon payments

• Nothing

Calculate the annual coupon payment for a bond with a face value of $1,000 and a coupon rate of 2.9%.

• $29

• $290

• $2.90

• $2,900

What is a bond?

• A debt instrument where the issuer borrows funds and agrees to repay with interest.

• The return an investor expects, based on the bond’s market price.

• The time until a bond’s face value is repaid.

• A rating indicating the issuer’s likelihood of defaulting on its debt.

What is the coupon payment for a $4,000 bond with a 6% coupon rate?

• $2400
• $120
• $600
• $240

• Face Value: $10,000

• Coupon Rate: 4.8% annually

• Maturity: 10 years

• What is the annual coupon payment?

• $600
• $400
• $520
• $480

• Face Value: $10,000

• Coupon Rate: 4.8% annually

• Maturity: 10 years

• Over the 10 years, the total interest you would earn is:

• $4,800
• $6,000
• $3,200
• $5,000

If you purchase a $1,000 bond for $990, with a $41 annual coupon, and the bond matures in 10 years, calculate the YTM:

• 4.22%

• 4.52%

• 5.22%

• 3.72%

Calculate the Coupon Payment

A $2,000 bond with a 6% coupon rate.

• $60
• $180
• $240
• $120

Calculate the Total Interest Earned

A $2,000 bond with a 6% coupon rate maturing in 7 years.

• $1,680
• $1,200
• $840
• $600