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Lee HW2

This document contains 25 multiple choice questions testing knowledge of bonds, yields, and bond calculations. The questions cover topics like bond pricing, accrued interest, yield calculations, coupon payments, and bond maturity values. Sample questions ask the holder to calculate accrued interest, cash out amounts for bond purchases, equivalent taxable yields, and bond yields based on price and maturity date information.

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Cheska Lee
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69 views7 pages

Lee HW2

This document contains 25 multiple choice questions testing knowledge of bonds, yields, and bond calculations. The questions cover topics like bond pricing, accrued interest, yield calculations, coupon payments, and bond maturity values. Sample questions ask the holder to calculate accrued interest, cash out amounts for bond purchases, equivalent taxable yields, and bond yields based on price and maturity date information.

Uploaded by

Cheska Lee
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 7

LEE, FRANCESCA GARNETH G.

3FM2

Item 1
A customer purchases 10 bonds that have a nominal yield of 8% p.a. at a price of 94 1/4. The
customer will receive semi annual payments of:

a) $377
b) $400
c) $754
d) $800

Item 2
Mr. Reyes calls up and asks why the maturity value of his RTB booking is less than what he
invested. What will you tell the client? The Bond was issued last August 1, 2007 and he bought
the security on August 21, 2008.

a) He bought the security at a premium so he paid more because of the accrued interest and
the cost of the Bond.
b) He bought the security at a premium thereby paying only for the cost of the bond.
c) He bought the security at par and has to pay for the custody fees
d) He bought the security at a discount and has to pay for the commission

Item 3
The client's money out in ROP is computed as:

a) Sum of face amount plus the total accrued interest on maturity


b) Face amount multiplied by price
c) Principal plus accrued interest
d) Principal multiplied by price
e) Client's total money in plus client's gain

Item 4
In Bond computation, accrued term means:

a) The number of days from settlement date to the next coupon date
b) The number of days from issue date to the next coupon date
c) The number of days from issue date to settlement date
d) The number of days from the last coupon date to settlement date
e) The number of days from settlement date to maturity date
Item 5
Upon the maturity of the bond, the client will get the:

a) Face value plus all the coupon interest


b) Accrued interest plus the net selling amount
c) Principal or money out plus the last coupon interest
d) Face value plus the accrued interest
e) Face value plus the last coupon interest

Item 6
The regular tenors of Treasury Bills are

a) 92,184,364
b) 90,180,360
c) 91,182,364
d) 90,181,364
e) 91,183.365

Item 7
All of the following securities offer good opportunity to profit to when interest rates are going
down, but which would provide the most profit if interest rates do go down?

a) 3 year RTBS
b) 1 year TBills
c) 180 day Tbills
d) 3 month Tbills
e) 1 year commercial paper

Item 8
You are selling Bonds at PAR if

a) The price of the Bond is 100


b) The selling price of the Bond is below 100
c) The selling price of the Bond is above 100
d) The YTM is equal to the coupon rate
e) A and D
Item 9
You are selling Bonds at a discount if

a) The selling YTM is > the coupon rate


b) The selling YTM is < the coupon rate
c) The selling YTM is equal to the coupon rate
d) The Face value is equal to the client's cash out
e) The Par value is > the client's cash out

Item 10
Minnie bought USD120K of ROP32 at par 36 days after the issuance date. His cash-out was
USD120,765.00. The coupon rate of the bond is 6.375%. At what price did he acquire the bond?

a) 107.650
b) 100.000
c) 106.375
d) 120.000
e) 110.000

Item 11
Charity Foundation, a tax exempt institution invested through Bank ABC Php100MM in BSP
SDA for 30 days at 5% gross, how much is client suppose to receive upon maturity?

a) Php100,333,333.33
b) Php100,416,666.66
c) Php100,412,087.91
d) Php100,329,670.33
e) Php100,400,000.00

Item 12
Walt decided to buy USD100K of ROP bonds for settlement on the coupon payment date at
97.75. How much is his cash-out?

a) USD 100,000
b) USD 97,750
c) USD 102,250
d) USD 197,750
e) Not enough information
Item 13
For an 8% bond with a par value of $1000 and a market value of $1,200, what is the current
yield?

a) 6.67%
b) 8.00%
c) 12.00%
d) 14.67%
e) 28.00%

Item 14
What would be the accrued interest for a 5% $1,000 bond settled on July 15th with payable
dates of April 15th and October 15th?

a) $10.00
b) $12.50
c) $25.00
d) $50.00

Item 15
If the yield on T-bills is 4% and it increases by 10 basis points, what is the new yield?

a) 4.01%
b) 4.10%
c) 4.40%
d) 5.00%
e) 5.10%

Item 16
For an 8% bond with a par value of $1000 and a market value of $1,200, what is the nominal
yield?

a) 4.00%
b) 6.00%
c) 6.67%
d) 8.00%
Item 17
What is the approximate yield to maturity for a 7%, $1,000 bond purchased for $1,150 and
maturing in six years?

a) 3.64%
b) 4.20%
c) 6.67%
d) 7.00%
e) 6.44%

Item 18
What is the principal investment in an ROP bond if the coupon interest is US$3,281.25 every 6
months and the coupon rate is 8.75%?

a) $ 50,000
b) $60,000
c) $ 65,000
d) $75,000
e) $80,000

Item 19
How much would be paid in principal and interest over the lifetime of a 20-year 4% bond with a
par value of $1,000?

a) $800
b) $1,400
c) $1,800
d) $2,000

Item 20
For a 6% ten-year corporate bond with a par value of $1000 purchased at $800, what is the
approximate yield to maturity?

a) 6.00%
b) 7.50%
c) 8.89%
d) 10.00%
Item 21
What is the equivalent taxable bond yield for an 8% tax exempt bond for an investor in the 28%
tax bracket?

a) 5.76%
b) 6.25%
c) 10.24%
d) 11.11%

Item 22
What is the capital gain on a $1,000 bond issued at $800 sold for $950 after $50 of the original
issue discount had accrued?

a) $25
b) $50
c) $75
d) $100

Item 23
What is the approximate yield to maturity for a 7%, $1,000 bond purchased for $800 and
maturing in ten years?

a) 7%
b) 8%
c) 9%
d) 10%

Item 24
How many months interest are paid for a bond issued January 1, 2007 and the first coupon April
1, 2007?

a) 1 month
b) 2 months
c) 3 months
d) 6 months

Item 25
What is the coupon rate of the USD50K ROP bond if the coupon payment is USD1,937.50
every 6 months?

a) 5.75%
b) 6.75%
c) 7.75%
d) 8.75%

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