1. The term Current Yield can be defined as:

Group of answer choices

a. The rate of return earned on a bond if it is called before its maturity date.

b. The return solely from the receipt of interest on a bond

2. Darnit Corporation issued 30 year bonds 5 years ago. At the time the bonds were issued, the bonds were rated AA by Moodys bond rating service. Today, Moodys changed its rating on the Darnit Corporation Bonds to A. You would expect the price of the Darnit bonds to:

Group of answer choices

a. To decrease since a A rating is a lower rating than a AA rating, thus indicating more risk

b. To increase since a A rating is a higher rating than a AA rating, thus indicating less risk

c. To remain unchanged, since the bond is already outstanding

d. To remain unchanged, since bond ratings do not influence the price of bonds

e. It is difficult to tell, because no information is given why the rating changed

c. The stated annual interest rate on a bond

d. The specified number of dollars of interest paid each period

e. The rate of return earned on a bond if it is held to maturity

3. You purchased a 30 year bond a year ago with a coupon interest rate and yield-to-maturity of 6%. Market interest rates today for bonds of similar risk and maturity are 13%. If you decide to sell your bond today, you would expect:

Group of answer choices

a. To sell the bond for less than what you paid for the bond.

b. To sell the bond for more than what you paid for the bond.

c. That since the coupon of the bond does not change, the price of the bond has not changed.

d. That since the par value of the bond does not change, the price of the bond has not changed.

e. That there is insufficient information to make a determination, it is impossible to determine whether the price of the bond has increased or decreased.