This is needed by April 13 @ noon...

If you multiply a bond?s current yield by its market price you get the __________.

a.	yield to maturity
b.	investors? required rate of return
c.	annual coupon rate
d.	cost of capital
e.	annual coupon payment

What is the market value of a bond that will pay a total of forty
semiannual coupons of $50 each over the remainder of its life?  Assume
the bond has a $1,000 face value and an 8% YTM.

a.	$634.86
b.	$642.26
c.	$1,135.90
d.	$1,197.93
e.	$1,215.62


Which of the following investments have grown faster than the rate of
inflation over the period 1926 ? 1999?

I.  Common stocks
II.  Treasury bills
III.  Long-term government bonds
IV.  Small stocks

a.	I and II only
b.	I, II, and IV
c.	III and IV only
d.	I and II only
e.	I, II, III, and IV


A bond with an annual coupon of $100 originally sold at par for
$1,000.  The current market interest rate on this bond is 9%. 
Assuming no change in risk, this bond would sell at a __________ in
order to compensate __________.

a.	premium; the purchaser for the above market coupon rate
b.	discount; the purchaser for the above market coupon rate
c.	premium; the seller for the above market coupon rate
d.	discount; the seller for the above market coupon rate
e.	discount; the issuer for the higher cost of borrowing

1. e.  "The coupon payment and face value are fixed by contract over
the life of the bond."  "Financial Markets and the Yield on Different
Financial Instruments" Douglas A. Ruby (June 23, 2003)
http://www.digitaleconomist.com/yld_4020.html

2. d.  $50 [1 -1/(1 +0.04) ^ 40]/0.0 4+ $1000/(1+ 0.04) ^ 40 =
$1197.93.  "Advanced Bond Concepts: Bond Pricing" Investopedia.com
http://www.investopedia.com/university/advancedbond/advancedbond2.asp

3. e.  "For example, the "Impact of Inflation" chart compares the
compound annual returns of stocks, bonds and T-bills over a period of
75 years (1926-2001). When inflation is factored in, common stocks
have historically brought an annual average return of 7.73%. But
inflation diminished the return for long-term government bonds to
2.18% ? and only 0.71% for Treasury bills."  "Inflation & Its Impact
on Investments" American International Group, Inc. (2004-2005)
http://www.aigvalic.com/fpc2003/uofa.nsf/contents/inflation

4. c. "If the opposite is true such that market rates have fallen,
then the bond will sell at a premium -- the market price will exceed
its face value."  "Financial Markets and the Yield on Different
Financial Instruments" Douglas A. Ruby (June 23, 2003)
http://www.digitaleconomist.com/yld_4020.html.  The original
interest-rate set by the market was $100/$1000 or 10%, so the market
interest rate has fallen.

Sincerely,

Wonko

Thank you for your assistance and clarification!  I appreciate your help