1. A loan has the following features:

Amount borrowed - USD 100 million

Interest rate - 3% per annum

Arrangement fee (to be paid upfront) 2% of the loan value

Repayment terms full amount to be repaid at the end of the loan period

Calculate the total cost of a five-year loan with these features:

a) 3.2%

b) 3.0%

c) 2.9%

d) 3.4%

2. Calculate the accrued coupon for a bond traded on 31st March with the following features: Nominal value USD 1000; Coupon rate 5%; Coupon payment once a year, on 31st December

a) USD 50.00

b) USD 12.33

c) USD 12.50

d) USD 15.00

e) None of the above

3. Suppose a seven-year USD 1000 bond with an 8% annual coupon rate and semi-annual coupon payments is trading with a yield to maturity (YTM) of 6.75%. Is this bond currently trading at a discount, at par, or at a premium to face value?

a) The bond is trading at a premium to par value

b) The bond is trading at par

c) The bond is trading at a discount to par value

d) More information is needed to answer

4. Suppose a 10-year USD 1000 bond with a coupon rate of 5% (annual coupon payments) is currently trading at a price of USD 1100 (clean price). What is the bonds yield to maturity?

a) 5.00%

b) 4.37%

c) 3.38%

d) 3.78%

5. Suppose a seven-year USD 1000 bond with an 8% annual coupon rate and semi-annual coupon payments is trading with a yield to maturity (YTM) of 6.75%. Calculate the estimated bond value. Note: as the bond pays semi-annual coupons, it is important to compute cash flows over 6-months periods, not annual ones. Semi-annual coupons are half of yearly coupons.

a) $1,075

b) $1,076

c) $1,098

d) $1,099

e) More information is needed to answer