Practice questions we did so far: Extra Bond Valuation Examples $($solutions posted on Canvas$)$

Below are additional practice questions:

$1.$ Which of the following statements is FALSE?

A$.$ The amount of each coupon payment is determined by the coupon rate of the bond.

B$.$ Prior to its maturity date, the price of a zero$-$coupon bond is always greater than its face

value.

C$.$ The simplest type of bond is a zero$-$coupon bond.

D$.$ There is an inverse relationship between bond price and YTM$.$

$2.$ Which of the following statements regarding bonds and their terms is FALSE?

A$.$ Coupon rate is not investor$$s rate of return.

B$.$ The yield to maturity of a bond is the discount rate that sets the future value $($FV$)$ of the

promised bond payments equal to the current market price of the bond.

C$.$ Zero$-$coupon bonds are also discount bonds.

D$.$ When we calculate a bond's yield to maturity by solving the formula,

Price of an n$-$period bond $=++...+,$

the yield we compute will be a rate per coupon interval.

$3.$ The Sisyphean Company has a bond outstanding with a face value of $$1000$ that reaches

maturity in $5$ years. The bond certificate indicates that the stated coupon rate for this bond

is $8\mathrm{.}1\%$ and that the coupon payments are to be made semiannually. Assuming the