Question 1:
A bond with a coupon rate of 7.2%, matuing in 10 years at a value of $1000 and a current market price of $800, will have a yield to maturity (using the approximation formula) of between ______% and ______%.
a. 10; 10.5
b. 10.5; 11
c. 11; 11.5
d. 11.5; 12
Question 2: Which of the following is the lowest in priority of claims against a bankrupt firm?
a. A junior mortgage bond
b. A senior debenture
c. Common stock
d. A subordinated debenture
Question 3: With regard to interest rates and bond prices, it can be said that ______.
a. a 1% change in interest rates will cause a greater change in long-term bond prices than short-term prices
b. a 1% change in interest rates will cause a greater change in short-term bond prices than long-term prices
c. long-term rates are more voloatile than short-term rates
d. a decrease in interest rates will cause bond prices to fall
Question 4:
Discuss the significance of the GrammLeach-Blile Act to investment banking. Are there any procedures in place to protect a bank's capital? Explain. (200 words)
Question 5:
Explain why Kirk Kerkorian is referred to as a "turnaround artist of the highest order." Describe how his actions affected the bond rating for General Motors. (200 words)