1. A $1,000 par value bond has a coupon interest rate of 10% and matures in 12 years. What is the market value of the bond if investor's required rate of return is 12%? Choose the closest answer. a. $863 b. $708 c. $1,032 d. $876 e. $732
2. A $1,000 par value bond is currently selling for $1,150. The bond matures in 12 years and has a coupon interest rate of 6%, with interest paid annually. What is the bond's current yield? Choose the closest answer. a. 4% b. 5% c. 6% d. 7% e. 8%
3. Which of the following will likely cause the market value of a bond to increase? a. The firm's TIE changes from 7x to 1x b. The bond's rating changes from BB to AAA c. The firm's current ratio changes from 2x to 6x d. The firm's average collection period (days sales outstanding changes from 45 days to 28 days. e. b and c only f. b, c and d only
4. A $1,000 par value bond matures in 14 years pays interest annually. It has a coupon interest rate of 10% and is currently selling for $1,467.03. What is investor's required rate of return for this bond? Choose the closest answer. a. 3% b. 4% c. 5% d. 6%