A 20-year bond with a principal value of $1,000,000 was issued 5 years ago, has a coupon rate of 10% with interest paid semi-annually and is priced at $100:

1) Is the bond priced at a premium, discount or par dollar price?__________

2) What is the nominal rate of interest on the bond?__________

3) What is the real rate of interest assuming 3% inflation?__________

4) What is the tenor of the bond?__________

5) Is the bond a capital market security or money market security?__________

6) What is the coupon rate of the bond?__________

7) What is the yield to maturity of the bond?__________

8) What would the current yield of the bond be if it was priced at $105?__________

Answer rating: 100% (QA)

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