Bond Basics Flashcards
Which of the following would be a quote for a US government bond?
105.625
105-20
105 5/8
105 10/16
105-20
Which of the following would be a quote for a US Government bond with a dollar price of $1,012.50?
101.25
101-8
101 1/4
101 4/16
101-8
How are Treasury Notes quoted?
Whole and Fractional
A municipal dealer buys a $1,000 par 30 year, 12% bond on a 12% basis. The dealer reoffers the bond, marking it up by 40 basis points. The yield at which the dealer is reoffering the bond is:
11.60%
In 2020, a customer buys 1 PDQ 10%, $1,000 par debenture, M ‘35, at 115. The interest payment dates are Jan 1st and Jul 1st. The nominal yield on the bond is
10.00%
Which statement is TRUE about bond price changes that result from interest rate movements?
A- Short term bond prices move more slowly than long term bond prices
B- Long term bond prices move more slowly than short term bond prices
C- Both short term and long term prices move at equivalent rates
D- No relationship exists between short term and long term bond price movements
A- Short term bond prices move more slowly than long term bond prices
In 2020, a customer buys 5 GE 10% debentures, M ‘40. The interest payment dates are Feb 1st and Aug 1st. The current yield on the bonds is 11.76%. The bonds are callable as of 2030 at 103. The bond is trading:
A- at a premium
B- at a discount
C- at par
D- in the money
B- at a discount
The current yield on a bond is
stated interest rate/ bond market value
A corporation has issued 8% AA rated sinking fund debentures at par. Three years later, similar issues are being offered in the primary market at 7%. Which statement is TRUE about the outstanding 8% issue?
A- the dollar price of the bond will be at a discount to par and the current yield will be higher than the nominal yield
B- The dollar price of the bond will be at a discount to par and the current yield will be lower than the nominal yield
C- The dollar price of the bond will be at a premium to par and the current yield will be lower than the nominal yield
D- The dollar rice of the bond will be at a premium to par and the current yield will be higher than the nominal yield
C- The dollar price of the bond will be at a premium to par and the current yield will be lower than the nominal yield
A 9%, $1,000 par corporate bond is trading at $1,100. What is the current yield?
8.18%
In 2020, a customer buys 1 PDQ 10%, $1,000 par debenture, M ‘35, at 115. The interest payment dates are Jan 1st and Jul 1st. The current yield on the bond is:
8.70%
If a bond is trading at a premium, which statement is TRUE?
A- The current yield will be higher than the nominal yield
B- The yield to maturity will be higher than the nominal yield
C- The yield to maturity will be lower than the current yield
D- The nominal yield and current yield will be the same
C- The yield to maturity will be lower than the current yield
When a bond trades at a premium, which bond yield will be the lowest?
Basis (or yield to maturity)
The City of Peoria, Illinois has outstanding $100,000,000 of 7% General Obligation bonds, M ‘39. The bonds are callable at 103, beginning 1/1/19. The bonds are currently trading at 104 ½. The call premium on the bonds is:
A- 1 1/2 points
B- 3 points
C- 4 1/2 points
D- 5 1/2 points
B- 3 points
Bonds with a call feature benefit the:
Issuer