Test Bank For Principles of Corporate Finance Global Edition Richard Brealey Stewart Myers Franklin Allen 10th Edition

Test Bank For Principles of Corporate Finance Global Edition Richard Brealey Stewart Myers Franklin Allen 10th Edition

Chapter 03

Valuing Bonds

Multiple Choice Questions
1. The following entities issue bonds to raise long-term loans except:
A. The federal government
B. State and local governments
C. Companies
D. Individuals

2. The type of bonds where the identities of bonds’ owners are recorded and the coupon interest payments are sent automatically are called:
A. Bearer bonds
B. Government bonds
C. Registered bonds
D. None of the above

3. A government bond issued in Germany has a coupon rate of 5%, face value of euros 100 and maturing in five years. The interest payments are made annually. Calculate the price of the bond (in euros)if the yield to maturity is 3.5%.
A. 100
B. 106.77
C. 106.33
D. none of the above

4. Generally, a bond can be valued as a package of:
I) Annuity, II) Perpetuity, III) Single payment
A. I and II only
B. II and III only
C. I and III only
D. none of the above

5. A government bond issued in Germany has a coupon rate of 5%, face value of euros 100 and maturing in five years. The interest payments are made annually. Calculate the yield to maturity of the bond (in euros) if the price of the bond is 106 euros.
A. 5.00%
B. 3.80%
C. 3.66%
D. none of the above