A coupon bond which pays interest of $50 annually, has a par value of $1,000, matures in 5 years, and is selling today at an $84.52 discount from par value. The current yield on this bond is __________.

A coupon bond which pays interest of $50 annually, has a par value of $1,000, matures in 5 years, and is selling today at an $84.52 discount from par value. The current yield on this bond is __________. 

A) 5%
B) 5.46%
C) 5.94%
D) 6.00%

Answer: B

An investor pays $989.40 for a bond. The bond has an annual coupon rate of 4.8%. What is the current yield on this bond?

An investor pays $989.40 for a bond. The bond has an annual coupon rate of 4.8%. What is the current yield on this bond? 

A) 4.80%
B) 4.85%
C) 9.60%
D) 9.70%

Answer: B

The yield to maturity of an 8-year zero coupon bond, with a par value of $1,000 and a market price of $623.20, is ______.

The yield to maturity of an 8-year zero coupon bond, with a par value of $1,000 and a market price of $623.20, is ______. 

A) 6.09%
B) 8.8%
C) 10.1%
D) 13.4%

Answer: A

Consider the expectations theory of the term structure of interest rates. If the yield curve is downward sloping, this indicates that investors expect interest rates to __________ in the future.

Consider the expectations theory of the term structure of interest rates. If the yield curve is downward sloping, this indicates that investors expect interest rates to __________ in the future. 

A) increase
B) decrease
C) not change
D) change in an unpredictable manner

Answer: B

The bonds of Elbow Grease Dishwashing Company have received a rating of "D" by Moody's. The "D" rating indicates __________.

The bonds of Elbow Grease Dishwashing Company have received a rating of "D" by Moody's. The "D" rating indicates __________. 

A) the bonds are investment grade
B) the bonds are junk bonds
C) the financial manager of Elbow Grease Dishwashing flunked his Finance course
D) none of the above

Answer: B

Under the pure expectations hypothesis, an upward sloping yield curve would indicate ________

Under the pure expectations hypothesis, an upward sloping yield curve would indicate ___________________.

A) expected increases in inflation over time
B) expected decreases in inflation over time
C) the presence of a liquidity premium
D) that the equilibrium interest rate in the short term part of the market is lower than the equilibrium interest rate in the long-term part of the market

Answer: A