# Mat 540 Quiz

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Mat 540 Quiz
homework #10, 3050
Student: ____________________________________________________________

_______________
1. The invoice price of a bond is the ______.
A. stated or flat price in a quote sheet plus accrued interest
B. stated or flat price in a quote sheet minus accrued interest
C. bid price
D. average of the bid and ask price 2. A mortgage bond is _______.
A. secured by other securities held by the firm
B. secured by equipment owned by the firm
C. secured by property owned by the firm
D. unsecured 3. You buy a TIPS at issue at par for \$1,000. The bond has a 3% coupon. Inflation turns out to be 2%, 3% and 4% over the next three years. The total annual coupon income you will receive in year three is _________.
A. \$30.00
A coupon bond which pays interest semi-annually has a par value of \$1,000, matures in 8 years, and has a yield to maturity of 6%. If the coupon rate is 7%, the intrinsic value of the bond today will be __________ (to the nearest dollar).
A. \$1,000
B. \$1,063
C. \$1,081
D. \$1,100 6. A coupon bond pays semi-annual interest is reported as having an ask price of 117% of its \$1,000 par value in the Wall Street Journal. If the last interest payment was made 2 months ago and the coupon rate is 6%, the invoice price of the bond will be _________.
A. \$1,140
B. \$1,170
C. \$1,180
D. \$1,200 7. The __________ of a bond is computed as the ratio of coupon payments to market price.
A. nominal yield
B. current yield
C. yield to maturity
D. yield to call 8. A 6% coupon U.S. treasury note pays interest on May 31 and November 30 and is traded for settlement on August 10. The accrued interest on \$100,000 face amount of this note is _________.
A. \$581.97
B. \$1,163.93
C. \$2,327.87
D. \$3,000.00

homework #10, 3050 Key 1. The invoice price of a bond is the ______.
A. stated or flat price in a quote sheet plus accrued interest
B. stated or flat price in a quote sheet minus accrued interest
C. bid price
D. average of the bid and ask price

Bodie - Chapter 10 #1
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