Quiz Solutions for Financial Management I, Spring 2008 - Quiz 4, Quizzes of Financial Management

Download Quiz Solutions for Financial Management I, Spring 2008 - Quiz 4 and more Quizzes Financial Management in PDF only on Docsity! Name: ____________________________ Nickname for website grades: _______________________ Financial Management I Spring 2008 Quiz 4 – Solutions Dr. Stanley D. Longhofer 11:00-12:15 You have 10 minutes to complete this quiz. It is worth 10 points (5 total questions). ______ 1. What is the current market price of 6.5 percent annual coupon bond with a par value of $5,000 and 12 years remaining to maturity if the current required return is 7.5 percent? A. $5,000.00 B. $2,602.06 C. $4,613.24 D. $922.65 E. None of the above; the correct answer is __________. ______ 2. What is the yield to maturity of a 5-year, zero-coupon bond with a $1,000 par value that is currently priced at $785.00? A. 4.96% B. 7.85% C. 0.00% D. The yield to maturity cannot be calculated for this investment. E. None of the above; the correct answer is __________. ______ 3. What is the current yield on a 10-year, 5.25 percent annual coupon bond with a par value of $1,000 and a yield to maturity of 4.75 percent? A. 4.75% B. 5.25% C. −0.20% D. 5.05% E. None of the above; the correct answer is __________. ______ 4. What is the capital gains yield on a 5-year, 6 percent annual coupon bond with a par value of $1,000 and a yield to maturity of 6.75 percent? A. 6.00% B. 0.56% C. 6.75% D. 0.75% E. None of the above; the correct answer is __________. ______ 5. TRUE or false: The price of a premium bond will fall over time if market required returns remain constant.