Question :
21.A two-year bond offers a yield of 6% and a : 1325666
21.A two-year bond offers a yield of 6% and a three year bond offers a yield of 7.5%. Under the expectations theory what should be the yield on a one year bond in two years?
a.5.95%
b.10.56%
c.3.06%
d.12.49%
22.The yield on a one-year bond is 6% today and is expected to be 8.5% next year. Based on the expectations theory, what is the yield of a two year bond today?
a.15.01%
b.12.68%
c.5.67%
d.7.24%
23.You are looking up bond prices in the newspaper and you find the following quote for a $1,000 face value treasury bond: 103:26. What is the price of this bond?
a.$103.26
b.$1,038.13
c.$1,032.60
d.$1,000
24.You have the choice between investing in a corporate bond with a yield of 8% or a municipal bond. If your marginal tax rate is 28%, what should be the yield on the municipal bond in order to be competitive?
a.8.00%
b.5.76%
c.11.11%
d.13.69%
25.You have the choice between investing in a corporate bond or a municipal bond with a yield of 8%. If your marginal tax rate is 28%, what should be the yield on the corporate bond in order to be competitive?
a.8.00%
b.5.76%
c.13.64%
d.11.11%
26.McLaughlin Enterprises has an outstanding $1,000 par value bond with a 11% coupon that pays at the end of each year. The bond matures in nine years. Bonds of similar risk have a required return of 10%. What is the market value of the McLaughlin bond?
a.$890.00
b.$1,053.35
c.$1,000.00
d.$1,057.59
27.Winburn Sports & Entertainment has an outstanding $1,000 par value bond with a 11% coupon that pays semiannually at the end of each period. The bond matures in nine years. Bonds of similar risk have a required return of 10%. What is the market value of the Winburn bond?
a.$1,035.54
b.$1,057.59
c.$1,058.45
d.$1,073.05
28.A 10-year Treasury bond with par value of $1,000 has a 6% coupon rate and pays interest every six months. The bond is three years old and has just made its sixth payment. The market now only requires a 5% return on the bond. What is the expected price of the bond?
a.$802.03
b.$1,058.45
c.$1,077.95
d.$1,350.73
29.A $1,000 par value bond that makes annual interest payments of $50 and matures in four years sells for $980. What is the yield to maturity of the bond?
a.5.57%
b.2.47%
c.4.54%
d.2.04%
30.Alexis Media issued five-year bonds one year ago with a 7.5% coupon that pays semi-annually (the bonds just paid the second coupon payment). Alexis announced a revised advertising revenue forecast that is quite bleak compared with the prevailing forecast at the time of the bond issuance. Investors now require a 9% return on Alexis bonds. What is the percent change in price of the bonds associated with the change in business conditions?
a.4.95% decrease
b.8.30% decrease
c.29.06% decrease
d.19.79% increase
e.Can’t determine with the information given