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P2 Quiz 1

This document is a quiz focused on bond valuation, including multiple-choice questions and problem-solving exercises. It covers concepts such as bond premium amortization, yield to maturity calculations, and specific bond scenarios. Students are required to compute bond values and complete a table related to bond interest payments and amortization.

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mohamadcasir21
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7 views2 pages

P2 Quiz 1

This document is a quiz focused on bond valuation, including multiple-choice questions and problem-solving exercises. It covers concepts such as bond premium amortization, yield to maturity calculations, and specific bond scenarios. Students are required to compute bond values and complete a table related to bond interest payments and amortization.

Uploaded by

mohamadcasir21
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
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P2 – Quiz 1

Bond Valuation

Name: Score:

Instruction: Write your name after each question.


Part 1 – Poll of answers (Increasing, Decreasing, Greater than, Lesser than, Equal, No effect, constant)
1. Amortization of Bond premium.
2. Issue price is greater than Face Value: Coupon is _____ YTM
3. In Bond Discount: Face Value is _________ Maturity Value
4. Amortization of interest expense in Bond discount.
5. Amortization of interest payments

Part 2 – Problem solving

1. Micleen Company has a bond with a face value of P1,000, a 10% annual coupon. Micleen Company
issued 150 bonds to be paid after 5 years. Compute the bond values when the yield to maturity is 7%,
10%, and 12%.

2. Compute the value of a 10-year, P200,000 total face value zero-coupon bond with a yield to maturity of
8%.

3. A P100,000, 6%, 20-year annual-pay bond has a yield of 6.5%. If the yield remains unchanged, to how
much will the bond value increase over the next three years?

4. A P200,000, 5%, 20-year annual-pay bond has a yield of 8.5%. How much is the book value of the
bond at the end of year 6?

5. A P200,000, 10%, 20-year annual-pay callable bond has a yield of 8.5%. If the market rate declines to
7% after 3 years, how much would the issuer pay if they call the bond?

6. Shoto bonds have 5 years remaining to maturity on January 1, 2025. Interest is paid annually. The
bonds have a P275,000 face value, and the coupon interest rate is 6 percent. The bonds have a yield
to maturity of 7.5 percent.

How much is the bond value on December 31, 2027?

How much is the Remaining balance of the discount on December 31, 2028?
P2 – Quiz 1
Bond Valuation

How much is the amortization on December 31, 2029?

How much is the bond value after the principal is paid?

7. Enji issued bonds on January 1, 2020 with a maturity of 5 years and an annual coupon of 6%. The
bonds are paid equally throughout the maturity. Enji bonds have a P500,000 face value, and a yield to
maturity of 7.5 percent.

Compute the issue price of the bonds.

Complete the Table


On January 1, 2023, Shoto Company issued 200 bonds that will mature in five years. The bonds have a face
value of P1,000 and a yield to maturity of 8 percent. They pay interest annually and have a 9 percent coupon
rate. Also, show the computation of the issue price.

Date Interest Interest expense Amortization Bond Value


payment
January 1, 2023
December 31, 2023
December 31, 2024
December 31, 2025
December 31, 2026
December 31, 2027

END
COC-BOTYOK-CPA

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