Financial Management: Core Concepts, Third Edition

Prepping for Exams

1. Five years ago Thompson Tarps, Inc. issued twenty-five-year 10% annual coupon bonds with a $1,000 face value. Since then, interest rates in general have risen, and the yield to maturity on the Thompson Tarps bonds is now 12%. Given this information, what is the price today for a Thompson Tarps bond?

   1. $843.14

   2. $850.61

   3. $1,181.54

   4. $1,170.27

2. Endicott Enterprises, Inc. has issued thirty-year semiannual coupon bonds with a face value of $1,000. If the annual coupon rate is 14% and the current yield to maturity is 8%, what is the firm’s current price per bond?

   1. $578.82

   2. $579.84

   3. $1,675.47

   4. $1,678.70

3. Benson Biometrics, Inc. has outstanding $1,000 face value 8% coupon bonds that make semiannual payments and have fourteen years ...