5. Lester and Hamilton Corporation has a 20-year bond issue that is currently selling for $897.70....
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5. Lester and Hamilton Corporation has a 20-year bond issue that is currently selling for $897.70. The bond has a $1,000 par value, a current yield of 15.04% and a yield to maturity of 15.15%. What is the bond's coupon in dollars? A. $135.00 B. $120.00 C. $115.00 D. $100.00 E. $90.00 6. 7. Regardless of the size of a bond's coupon payment and maturity date, a bond's price moves in the same direction from interest rate movements (e.g., if interest rates rise, bond prices rise). A. TRUE B. FALSE The text and discussions in class have referred to the current yield. The current yield is: A. the rate of return the bond is currently offering, i.e., it is another term for the bond's yield to maturity. B. the expected increase or decrease in the bond's price. C. the return on the bond if the bond's capital gain yield is zero (0.0%). D. the ratio of the interest payment divided by the bond's market price today. E. Both answers C and D are correct. 8. Larry's Leathers has a 9.5 percent coupon bond outstanding. The bond pays interest annually and has a $1,000.00 par value. If the bond is currently selling at $1,204.00, what rate of return are the investors demanding on the bond issue, that is, what is the bond's yield to maturity? The bond will mature in 20 years. A. 11.1% B. 10.2% C. 9.5% D. 8.1% E. 7.5% 5. Lester and Hamilton Corporation has a 20-year bond issue that is currently selling for $897.70. The bond has a $1,000 par value, a current yield of 15.04% and a yield to maturity of 15.15%. What is the bond's coupon in dollars? A. $135.00 B. $120.00 C. $115.00 D. $100.00 E. $90.00 6. 7. Regardless of the size of a bond's coupon payment and maturity date, a bond's price moves in the same direction from interest rate movements (e.g., if interest rates rise, bond prices rise). A. TRUE B. FALSE The text and discussions in class have referred to the current yield. The current yield is: A. the rate of return the bond is currently offering, i.e., it is another term for the bond's yield to maturity. B. the expected increase or decrease in the bond's price. C. the return on the bond if the bond's capital gain yield is zero (0.0%). D. the ratio of the interest payment divided by the bond's market price today. E. Both answers C and D are correct. 8. Larry's Leathers has a 9.5 percent coupon bond outstanding. The bond pays interest annually and has a $1,000.00 par value. If the bond is currently selling at $1,204.00, what rate of return are the investors demanding on the bond issue, that is, what is the bond's yield to maturity? The bond will mature in 20 years. A. 11.1% B. 10.2% C. 9.5% D. 8.1% E. 7.5%
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