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Question 1:You have observed the following returns on ABC’s stocks over the last five years:3.6%, 8.1%, -9.2%, 10.7%, -3.6% What is the geometric average returns on the stock over this five-year period.
Question 2: You have observed the following returns on ABC’s stocks over the last five years:4.1%, 9%, -7%, 11%, -6.7% What is the arithmetic average returns on the stock over this five-year period.
Question 3 You have observed the following returns on ABC’s stocks over the last five years: 4.2%, 8.4%, 9.3%, 10.5%, 6.7% What is the arithmetic average returns on the stock over this five-year period.
Question 4 You have observed the following returns on ABC’s stocks over the last five years: 2.5%, 8.5%, 11.1%, 10.7%, 8.3%What is the geometric average returns on the stock over this five-year period.
Question 5 Suppose the returns for Stock A for last six years was 4%, 7%, 8%, -2%, 9%, and 7%. Compute the standard deviation of the returns.
Question 6 ABC’s Inc.’s bonds currently sell for $1,280 and have a par value of $1,000. They pay a $135 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,050. What is their yield to call (YTC)?
Question 7 Stealers Wheel Software has 5.25% coupon bonds on the market with nine years to maturity. The bonds make semi-annual payments and currently sell for 109.17% of par. What is the current yield?
Question 8 A firm’s bonds have maturity of 10 years with a $1000 face value, an 8% semi-annual coupon, are callable in 5 years, at $1,050, and currently sells at a price of $1,100. What is the yield to call (YTC)?
Question 9 ABC Corp. issued 15-year bonds 2 years ago at a coupon rate of 10.6%. The bonds make semi-annual payments. If these bonds currently sell for 97% of par value, what is the YTM?
Question 10 The rate required in the market on a bond is called the: yield to maturity, liquidity premium, risk premium, current yield, call yield
Question 11 ABC Inc., has $1,000 face value bonds outstanding. These bonds mature in 3 years, and have a 6.5 percent coupon. The current price is quoted at 98.59 percent of par value. Assume semi-annual payments. What is the yield to maturity?
Question 12 A bond which sells for less than the face value is called a: premium bond, debenture, discount bond, perpetuity, par value bond.
Question 13 The 8 percent coupon bonds of the Peterson Co. are selling for 98 percent of par value. The bonds mature in 5 years and pay interest semi-annually. These bonds have a yield to maturity of __percent.
Question 14 ABC wants to issue 8-year, zero coupon bonds that yield 7.61 percent. What price should they charge for these bonds if they have a par value of $1,000? That is, solve for PV. Assume annual compounding. Hint: zero coupon bonds means PMT = 0
Question 15 ABC has issued a bond with the following characteristics: Par: $1,000; Time to maturity: 9 years; Coupon rate: 5%; Assume semi-annual coupon payments. Calculate the price of this bond if the YTM is 7.15%
Question 16 The principal amount of a bond that is repaid at the end of term is called the par value or the: back-end amount, coupon, coupon rate, discount amount, face value
Question 17 A discount bond has a yield to maturity that: exceeds the coupon rate. equals zero is equal to the current yield, is less than the coupon rate, equals the bond’s coupon rate Question 18 Assume that you wish to purchase a 15-year bond that has a maturity value of $1,000 and a coupon interest rate of 7%, paid semiannually. If you require a 10.59% rate of return on this investment (YTM), what is the maximum price that you should be willing to pay for this bond? That is, solve for PV.
Question 19 BCD’s $1,000 par value bonds currently sell for $798.40. The coupon rate is 10%, paid semi-annually. If the bonds have 5 years to maturity, what is the yield to maturity? Question 20 The 13.99 percent coupon bonds of the Peterson Co. are selling for $838.4. The bonds mature in 5 years and pay interest semi-annually. These bonds have current yield of _____ percent.
Question 21 A premium bond is a bond that: has a face value in excess of $1,000. has a par value which exceeds the face value, is selling for less than par value, is callable within 12 months or less, has a market price which exceeds the face value
Question 22 You paid $1,041 for a corporate bond that has a 7.59% coupon rate. What is the current yield? Hint: if nothing is mentioned, then assume par value = $1,000
Question 23 The 9.98 percent, $1,000 face value bonds of Tim McKnight, Inc., are currently selling at $1,053.3. What is the current yield?
Question 24 ABC’s bonds have a 9.5 percent coupon and pay interest semi-annually. Currently, the bonds are quoted at 106.315 percent of par value. The bonds mature in 8 years. What is the yield to maturity?
Question 25 ABC has issued a bond with the following characteristics: Par: $1,000; Time to maturity: 13 years; Coupon rate: 11%; Assume semi-annual coupon payments. Calc. price of bond ytm 9.29%
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