Bonds

Topics: Bond, Bonds, Time value of money Pages: 7 (989 words) Published: March 8, 2014
901. A sum of Rs. 100/- perpetual bond is currently selling for RS. 95/-. The coupon rate of interest is 13.5%. The approximate discount rate is 15%. The value of the bond and the YTM is: (a) Rs. 90/- and 14.2% Value is (13.5*15%=90) and YTM is ((13.5/95)*100=14.21%) (b) Rs. 100/- and 13.5%

(c) Rs. 90 and 15%
(d) Rs. 90/- and 13.5%
902. In 2001, Meridian Ltd. has issued bonds of Rs. 10,000/-each due in 2011 with a 14% per annum coupon rate payable at the end of each year during the life of the bond. If the required rate of interest is 8%, find the present value of the bond. Tick the nearest option. (a) 10,000

(b) 7302
(c) 2,700
(d) 14,026 (9394.11+4631.93=14026.05)

903. The present market value of an equity share is Rs. 80/-; and the exercisable price of the warrant is Rs. 60/- per share. An investor is holding a warrant entitling him to purchase 50 equity shares. The minimum value of the warrant is: (a) 1,000/- (80-60=20*50=1000)

(b) 4,000/-
(c) 3,000/-
(d) None of these

904. A bond with a coupon rate of 8% is available at its face value of Rs. 1,000/-. The market rate of return on an instrument with similar risk goes down to 6%. The bond price will become: (a) 1,000/-

(b) 750/-
(c) 1,333/- (800/6%)
(d) None of these

905. A bond with a coupon rate of 10% is available at Rs. 1,250/-. The face value of the bond is Rs. 1,000/-. The effective yield on the bond is: (a) 10%
(b) 8% (100/1250*100=8%)
(c) 12%
(d) None of these

906. In 2002, XYZ has issued bonds of Rs. 1,000/- each due in 2012 with 14% p.a. coupon rate payable at the end of each year during the life of the bond. The present value of the bond is ------------- if the required rate of return is 14%. (a) 1,000/-

(b) 9,500/-
(c) 2,750/-
(d) 15,000/-

(907) A Rs. 1,000/- bond has a 6% annual coupon and is due in 2 years. The value in today’s market is Rs. 900/-. The YTM of this bond is: (a) 9.9%
(b) 10.40%
(c) 11.90%
(d) 11%
(e) None

(908) If annual cash flow for a bond is Rs. 200, find the present value of the cash flows, assuming that the inflows will continue for 5 years at the required rate of 11%. (a) Rs. 639
(b) Rs. 739
(c) Rs. 839
(d) Rs. 869
(e) Rs. 939

(909) Calculate the price of the par value of Rs. 100/-, 8-year 13.4% bond on which interest is paid semi-annually. The required rate of return of the bond is 14%. (a) 95.50
(b) 96.00
(c) 96.99
(d) 97.16

(910) A 100 rupee par value bond bears a coupon rate of 14% and matures after 5 years. Interest is paid semi-annually. Compute the value of the bond if the required rate of return is 16%. (a) 94.50

(b) 93.27
(c) 95.25
(d) 93.90

(911) Consider a five year fixed income security which promises $120 per year. Calculate the value of the security if the market interest rate rises from 5% to 6% per year.

(912) Compute the current yield of a 10-year 12% coupon bond with a par value of Rs. 1,000/- and is selling for Rs. 950/-. (a) 12.63%
(b) 13.50%
(c) 12.00%
(d) 13.25%

(913) A 1000 rupee par value bond carrying a coupon rate of 9% maturing after 8 years is currently selling at Rs. 800/-. What is the YTM of the bond? (a) 13.19%
(b) 14.15%
(c) 13.58%
(d) 14.01%

(914) The IDBI deep discount bond offers investors Rs. 200,000/- after 25 years for an initial investment of Rs. 5,000/- The interest rate implied in the offer is: (a) 14.81%
(b) 15.00%
(c) 15.45%
(d) 16.50%
(e) 15.89
(f) Not possible

(915) Consider a four year pure discount bond with a face value of $1,000. If the current price is $850, compute the annualized yield of this pure discount bond.
(a)5.57%
(b)5.00%
(c)4.15%
(d)3.30%
(e)none of the above

(916)If a bond selling for $900 has an annual coupon payment of $80 and a face value of $1,000, what is its current yield?
(a)8.00%
(b)9.82%
(c)11.00%
(d)8.89%
(e)None of the above

(917)The ________ is the discount rate that makes the present value of the bond's stream...
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