Chapter 4 Valuing Bonds Chemistry Worksheet With Answers Page 21
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21A change in a bond’s interest rate risk has a greater price impact on bonds
Statement I:
with longer maturities.
Statement II:
Government bonds have lower default risk than corporate bonds or
municipal bonds.
Statement III:
Trading volume is greater for corporate bonds than government bonds.
a. Statement I only
b. Statement II only
c. Statements I and II only
d. Statements II and III only
ANS: C
DIF: M
REF: 4.2 Bond Prices and Interest Rates
81. A bond pays $60 interest payments twice a year. What is the coupon rate for the bond if the par value
of the bond is $1,000?
a. 6.00%
b. 9.00%
c. 12.00%
d. 15.00%
ANS: C
$60 * 2 = $120
$120/$1,000 = .12
DIF: E
REF: 4.1 Valuation Basics
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