Exam 15: The Term Structure of Interest Rates

The following is a list of prices for zero-coupon bonds with different maturities and par values of $1,000. What is the price of a 4-year maturity bond with a 12% coupon rate paid annually? (Par value = $1,000.)

The following is a list of prices for zero-coupon bonds with different maturities and par values of $1,000. What is the yield to maturity on a 3-year zero-coupon bond?

Bond stripping and bond reconstitution offer opportunities for ______, which can occur if the _________ is violated.

Treasury STRIPS are

Investors can use publicly available financial data to determine which of the following? I) The shape of the yield curve II. Expected future short-term rates (if liquidity premiums are ignored) III. The direction the Dow indexes are heading IV. The actions to be taken by the Federal Reserve

Forward rates ____________ future short rates because ____________.

What is the yield to maturity of a 2-year bond?

Suppose that all investors expect that interest rates for the 4 years will be as follows: What is the yield to maturity of a 3-year zero-coupon bond?

The following is a list of prices for zero-coupon bonds with different maturities and par values of $1,000. You have purchased a 4-year maturity bond with a 9% coupon rate paid annually.The bond has a par value of $1,000.What would the price of the bond be one year from now if the implied forward rates stay the same?

An upward sloping yield curve is a(n) _______ yield curve.

The expectations theory of the term structure of interest rates states that

Suppose that all investors expect that interest rates for the 4 years will be as follows: What is the price of a 3-year zero-coupon bond with a par value of $1,000?

The following is a list of prices for zero-coupon bonds with different maturities and par values of $1,000. According to the expectations theory, what is the expected forward rate in the third year?

What would the yield to maturity be on a four-year zero-coupon bond purchased today?

What is the yield to maturity of a 1-year bond?

What should the purchase price of a 2-year zero-coupon bond be if it is purchased today and has face value of $1,000?

The value of a Treasury bond should

The following is a list of prices for zero-coupon bonds with different maturities and par values of $1,000. What is the price of a 4-year maturity bond with a 10% coupon rate paid annually? (Par values = $1,000.)

An inverted yield curve implies that

What should the purchase price of a 4-year zero-coupon bond be if it is purchased today and has face value of $1,000?