1.

Bond Features
Maturity (years)	5
Face Value =	$1,000
Coupon Rate =	5.00%
Coupon dates (Annual)
Market interest rate today	5.00%
Time to call (years)	3
Price if Called	$1,050.00
Market interest rate in Year 3	4.00%

The above bond is callable in 3 years. When the bond is issued today, interest rates are 5.00% . In 3 years, the market interest rate is 4.00% . Should the firm call back the bonds in year 3 and if so, how much would the firm save or lose by calling back the bonds?

Group of answer choices

yes it should call back the bonds, it will save $29.58

no it should not call back the bonds, it will lose $31.14

yes it should call back the bonds, it will save $31.14

yes it should call back the bonds, it will save $32.07

no it should not call back the bonds, it will lose $32.07

no it should not call back the bonds, it will lose $29.58

2.

LO2

Bond Features
Maturity (years) =	6
Face Value =	$1,000
Coupon Rate =	5.00%
Price =	$1,100
Coupon (Annual)

What is the YTM (annual) of the above bond?

Group of answer choices

3.19%

3.15%

3.16%

3.18%

2.83%

3.

Bond Features
Maturity (years)	9
Face Value =	$1,000
Coupon Rate =	5.00%
Current Price =	$980
Coupon dates (Annual)
Time to call (years)	6
Price if Called	$1,050

What is the bond's yield to call (YTC) (annual) if the bond is called at its first possible date?

Group of answer choices

6.18%

5.73%

5.28%

6.12%

5.40%

4.

Use the bond term's below to answer the question Maturity 6 years Coupon Rate 4% Face value $1,000 Annual Coupons Market Interest Rate 6% Assuming the YTM remains constant throughout the bond's life, what is percentage capital gains/loss between periods 5 and 6 ?

Group of answer choices

1.92%

2.02%

1.98%

1.85%