1. A 10-year, $1,000 face value bond sells for $925 and has an 8% annual coupon rate. What is the bond’s current yield?
A. 8.65% B. 8.00% C. 8.33% D. 7.88% E. 8.95%
2. Which of the following statement is correct?
A. Coupon interest rate is the rate of return earned on a bond if it is held to maturity.
B. If a bond’s yield to maturity exceeds its coupon rate, the bond will sell at a discount.
C. All else equal, if a bond’s yield to maturity increases, its price will fall.
D. Current yield measures the total return for investors
E. Both B and C are correct.
3. The Carter Company's bonds mature in 10 years have a par value of $1,000 and an annual coupon interest rate of 8%. The market interest rate for the bonds is 9%. What is the price of these bonds?
A. $935.82
B. $941.51
C. $958.15
D. $964.41
E. $979.53