Chapter 4 Valuing Bonds Chemistry Worksheet With Answers Page 5
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21ANS: B
FV: 1000
PMT: 0
I/Y: 8
N: 5
PV: 680.58
DIF: E
REF: 4.3 Types of Bonds
17. You just bought a 5 year zero coupon bond with a $1,000 face value for $735.67. What is the yield to
maturity of this bond?
a. 10.36%
b. 6.33%
c. 4.69%
d. 8.18%
ANS: B
FV: 1000
PV: 735.67
PMT: 0
N: 5
I/Y: 6.33
DIF: E
REF: 4.3 Types of Bonds
18. You just bought a 5 year zero coupon bond with a $1,000 face value for $735.67. What is the taxable
capital gain on this bond next year?
a. $274.33
b. $68.51
c. $169.47
d. $46.64
ANS: D
FV: 1000
PV: 735.67
PMT: 0
N: 5
I/Y: 6.33
FV: 1000
PMT: 0
N: 4
I/Y: 6.33
PV: 782.31
capital gain: 782.31-735.67 = 46.64
DIF: M
REF: 4.4 Bond Markets
19. The real return is 10% and the expected rate of inflation is 4.5%. What is the nominal rate?
a. 4.50%
b. 14.95%
c. 10.00%
d. 8.69%
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