EXAM 3

Question 1

which of the following terns apply to a bond?

Answer 1

• par value
  -coupon rate
  -time value of money

Question 2

when interest rates in the market rise, we can expect the price of bonds to

Answer 2

decrease

Question 3

what four variables are required to calculate the value of a bond?

Answer 3

-yield to maturity
- time remaining to maturity
- par value
-coupon rate

Question 4

what is a corporate bond’s yield to maturity?

Answer 4

• YTM is the prevailing market interest rate for bonds with similar features
• YTM is the expected return for an investor who buys the bond today and holds it to maturity

Question 5

which one of the following is the most import