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A 10year bond with a 9% annual coupon has a yield to maturity
of 8%. Which of the following statements is CORRECT?









Which of the following events would make it more likely that a
company would choose to call its outstanding callable bonds?









Problem 519
Assume that the real riskfree rate, r*, is 2% and that
inflation is expected to be 7% in Year 1, 5% in Year 2, and 4% thereafter.
Assume also that all Treasury securities are highly liquid and free of default
risk. If 2year and 5year Treasury notes both yield 10%, what is the
difference in the maturity risk premiums (MRPs) on the two notes; that is, what
is MRP_{5}minus
MRP_{2}? Round your answer to two decimal places.
%
Which of the following statements is CORRECT?









Determinant of Interest Rates The real riskfree rate is 4%. Inflation is expected to be 3% What is the yield on 2year Treasury securities? Round your What is the yield on 3year Treasury securities? Round your 
Problem 57
Bond Valuation with Semiannual Payments
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Renfro Rentals has issued bonds that have a 11% coupon rate,
payable semiannually. The bonds mature in 19 years, have a face value of
$1,000, and a yield to maturity of 9%. What is the price of the bonds? Round
your answer to the nearest cent.
$
Problem 51
Bond Valuation with Annual Payments
Jackson Corporation’s bonds have 15 years remaining to maturity.
Interest is paid annually, the bonds have a $1,000 par value, and the coupon
interest rate is 6%. The bonds have a yield to maturity of 8%. What is the
current market price of these bonds? Round your answer to the nearest cent.
$
Problem 56
Maturity Risk Premium
The real riskfree rate is 3%, and inflation is expected to be
2% for the next 2 years. A 2year Treasury security yields 6%. What is the
maturity risk premium for the 2year security?
%
Assume that all interest rates in the economy decline from 10%
to 9%. Which of the following bonds would have thelargestpercentage
increase in price?









Tucker Corporation is planning to issue new 20year bonds.
Initially, the plan was to make the bonds noncallable. If the bonds were made
callable after 5 years at a 5% call premium, how would this affect their
required rate of return?









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Problem 514 Â·
A bond that matures in 10 years sells for $1,190.The bond has % 
Which of the following statements is CORRECT?









Problem 58
Yield to Maturity and Call with Semiannual Payments
Thatcher Corporation’s bonds will mature in 16 years. The bonds
have a face value of $1,000 and an 7.5% coupon rate, paid semiannually. The
price of the bonds is $1,100. The bonds are callable in 5 years at a call price
of $1,050. Round your answers to two decimal places.
What is their yield to maturity?
%
What is their yield to call?
%
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remaining)
Bond A has a 9% annual coupon, while Bond B has a 7% annual
coupon. Both bonds have the same maturity, a face value of $1,000, and an 8%
yield to maturity. Which of the following statements is CORRECT?









Problem 52
Yield to Maturity for Annual Payments
Wilson Wonders’s bonds have 7 years remaining to maturity.
Interest is paid annually, the bonds have a $1,000 par value, and the coupon
interest rate is 9%. The bonds sell at a price of $1,095. What is their yield
to maturity? Round your answer to two decimal places.
%
You are considering two bonds. Bond
A has a 9% annual coupon while Bond B has a 6% annual coupon. Both bonds have a
7% yield to maturity, and the YTM is expected to remain constant. Which of the
following statements is CORRECT?









Which of the following statements is
CORRECT?









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