CAPITOLO 8
Bond Investment Quiz
Test your knowledge on bond investments and related financial concepts with this engaging quiz! Dive into questions about TIPS, zero-coupon bonds, duration, and more.
Whether you're a finance student or a professional looking to refresh your skills, this quiz covers:
- Coupon calculations
- Interest rate risks
- Yield spreads
You buy a TIPS at issue at par for $1,000. The bond has a 3.7% coupon. Inflation turns out to be 2.7%, 3.7%, and 4.7% over the next 3 years. The total annual coupon income you will receive in year 3 is _________.
$ 41,26
$ 37,00
$ 38,37
$ 40,70
Assuming semiannual compounding, a 15-year zero coupon bond with a par value of $1,000 and a required return of 14.0% would be priced at _________.
$ 877,19
$ 934,58
$ 131,37
$ 140,10
A bond swap made in response to forecasts of interest rate changes is called ______.
An intermarket spread swap
A substitution swap
A pure yield pickup swap
A rate anticipation swap
Consider the following $1,000 par value zero-coupon bonds
The expected 1-year interest rate 2 years from now should be _________.
| BOND | YEARS TO MATURITY | YIELD TO MATURITY |
| A | 1 | 6,20% |
| B | 2 | 7,70% |
| C | 3 | 8,20% |
| D | 4 | 8,70% |
| E | 5 | 10,75% |
19,34%
19,28%
9,21%
11,76%
All other things equal (YTM = 10%), which of the following has the shortest duration?
A 20-year bond with a 9% coupon
A 10-year zero-coupon bond
A 20-year bond with a 7% coupon
A 30-year bond with a 10% coupon
You buy a 8-year $1,000 par value 4.20% annual-payment coupon bond priced to yield 6.20%. You do not sell the bond at year-end. If you are in a 15% tax bracket, at year-end you will owe taxes on this investment equal to _______.
$ 6,30
$ 4,45
$ 8,15
$ 9,30
You buy a bond with a $1,000 par value today for a price of $830. The bond has 7 years to maturity and makes annual coupon payments of $66 per year. You hold the bond to maturity, but you do not reinvest any of your coupons. What was your effective EAR over the holding period?
8,42%
10,10%
10,57%
7,33%
A bank has an average duration of its liabilities equal to 2 years. The bank's average duration of its assets is 3.5 years. The bank's market value of equity is at risk if _______________________.
Interest rates fall
Credit spreads fall
Interest rates rise
The price of all fixed-income securities rises
A pension fund must pay out $1 million next year, $2 million the following year, and then $3 million the year after that. If the discount rate is 8%, what is the duration of this set of payments?
2 years
2.15 years
2.29 years
2.53 years
The historical yield spread between the AA bond and the AAA bond has been 25 basis points. Currently the spread is only 9 basis points. If you believe the spread will soon return to its historical levels, you should ________________________.
Buy the AAA and short the AA
Buy both the AA and the AAA
Short both the AA and the AAA
Buy the AA and short the AAA
You buy a 8-year $1,000 par value 4.50% annual-payment coupon bond priced to yield 6.50%. You do not sell the bond at year-end. If you are in a 15% tax bracket, at year-end you will owe taxes on this investment equal to _______.
$ 4,94
$ 6,75
$ 9,75
$ 8,56
You buy a bond with a $1,000 par value today for a price of $840. The bond has 5 years to maturity and makes annual coupon payments of $68 per year. You hold the bond to maturity, but you do not reinvest any of your coupons. What was your effective EAR over the holding period?
12,08%
8,09%
11,14%
9,79%
{"name":"CAPITOLO 8", "url":"https://www.quiz-maker.com/QPREVIEW","txt":"Test your knowledge on bond investments and related financial concepts with this engaging quiz! Dive into questions about TIPS, zero-coupon bonds, duration, and more.Whether you're a finance student or a professional looking to refresh your skills, this quiz covers:Coupon calculationsInterest rate risksYield spreads","img":"https:/images/course4.png"}