Exam 3: Introduction to Fixed-Income Valuation

The following information relates to Questions 15-17 Bond Coupon Rate Time-to-Maturity Time-to-Maturity Spot Rates 8\% 3 years 1 year 8\% 7\% 3 years 2 years 9\% 6\% 3 years 3 years 10\% All three bonds pay interest annually. -based upon the given sequence of spot rates, the yield-to-maturity of bond Z is closest to:

The following information relates to Questions A bond with 5 years remaining until maturity is currently trading for 101 per 100 of par value. The bond offers a 6% coupon rate with interest paid semi-annually. The bond is first callable in 3 years, and is callable after that date on coupon dates according to the following schedule: End of Year Call Price 3 102 4 101 5 100 -The bond's annual yield-to-maturity is closest to:

A yield curve constructed from a sequence of yields-to-maturity on zero-coupon bonds is the:

Relative to bond C, for a 200 basis point decrease in the required rate of return, bond b will most likely exhibit a(n):