In which situation(s) might a bond be called?

Select one:

a.

When the interest rates are sufficiently higher than the coupon rate.

Determine whether bond #4 below is trading at a premium, at par, or at a discount?

Bond No.Bond No.	Face ValueFace Value	RedemptionRedemption	Coupon RateCoupon Rate	Years to RedemptionYears to Redemption	Yield RateYield Rate
1.1.	$1000$1000	At ParAt Par	j2=8%j2=8%	1010	j2=10%j2=10%
2.2.	$5000$5000	At ParAt Par	j2=12%j2=12%	2525	j2=9%j2=9%
3.3.	$2000$2000	At ParAt Par	j2=6.5%j2=6.5%	55	j2=6.5%j2=6.5%
4.4.	$1000$1000	At 105At 105	j2=5%j2=5%	1010	j2=5%j2=5%

Select one:

a.

This bond is trading at a premium.

b.

This bond is trading at a discount.

c.

This bond is trading at par.

A gold mining company issued bonds 5 years ago. The bonds will mature 5 years from now. News breaks out that the companys flagship mine just got irreparably flooded. What will happen to the yield on the companys bonds?

Select one:

a.

It does not make sense to talk about a yield in such dire circumstances.

b.

The yield will go down.

c.

The yield will go up.

d.

The yield will remain the same

b.

When the interest rates are equal to the coupon rate.

c.

When the interest rates are sufficiently lower than the coupon rate.

d.

All of the above.

e.

None of the above.