1. Silver Dart Lodge Inc. sold an issue of 25-year, $1,000 par value bonds to th

Question

1. Silver Dart Lodge Inc. sold an issue of 25-year, $1,000 par value bonds to the public. The bonds has a 7.25% coupon rate and pays interest annually. The current market rate of interest on the Silver Dart Inc. bonds is 6.5%. What is the current market price of the bonds? Round the answer to two decimal places.
a) $1,192.15
b)$1,000
c)$871.58
d) $1,091.48

2. Fantastic Floors Inc. just issued zero-coupon bonds with a par value of $1,000. The bond has a maturity of 15 years and a yield to maturity of 7.45%, compounded semi-annually. What is the current price of the bond? Round the answer to two decimal places.
a) $333.81
b)$1,095.91
c)$555.92
d)$896.01

3. 12 years ago Marco Chip Inc. issued 30-year to maturity zero-coupon bonds with a par value of $1,000. The bond has yield to maturity of 9.3% compounded semi-annually. What is the current price of the bond? Round the answer to two decimal places.
a) $194.71
b)$1,134.85
c)$934.25
d)$1463.80

4. Tom is considering the purchase of Red Lobster Inc. bonds that were issued 4 years ago. When the bonds were originally sold, they had a 25-year maturity and a 6.54% coupon interest rate paid annually. The bond is currently selling for $1,178. What is the yield to maturity on the bonds if you purchased the bond today? Round the answer to two decimal places in percentage form
a)12.94%
b)5.14%
c)8.41%
d)15.22%

5. Morning Star Inc. sold an issue of 30-year, $1,000 par value bonds to the public. The bonds has a 14.6% coupon rate and pays interest annually. It is now 7 years later. The current market rate of interest of the Morning Star INc. bonds is 11.7%. What is the current market price (intrinsic value) of the bonds? Round the answer to two decimal places.
a) 828.65
b)820.431
c) 1,156.21
d) $1,228.41

6. Alex plans to purchase a callable bond of Horizon Inc. The bond is 20-year to maturity, carry 13.5% annual coupon, paid semi-annually, and have a$1,000 par value. The bond is selling now for $1,287 each. The bond can be called back in 7 years at a call price $1,067.5. What is the yield to call for these bonds? Round the answer to two decimal places in percentage form.
a)18.93%
b)12.27%
c)11.01%
d)8.67%

Explanation / Answer

my answer is 1)C 2)A 3)A 4)C 5)B 6)D

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