# Australian Treasury and the Yield to Maturity of A Bond Questions Response

**You will require access to excel to complete at least one question in this quiz. See, for example, the practice sets which require you use =rate(nper,pmt,pv,[fv],[type],[guess]) function in excel to calculate bond yield. In using this function, fv is the face value. **

**Remember yield to maturity is expressed as an annual rate. Coupon rate is also expressed as annual rate (i.e total annual coupons/par value)**

**As per lecture advice, assume par value is $1000 unless otherwise stated.**

**1**

#### Question text

The Australian Treasury has issued 10-year zero coupon bonds with a face value of $1,000. Assume that coupon payments are normally semiannual. What will be the current market price of these bonds if the YTM for similar investments in the market is 6.25 percent? (Round to the nearest dollar.)

Select one:

Suppose an investor earned a yield of 7.6 percent p.a on a bond paying coupons twice a year. What is the effective annual yield (EAY) on this investment? (answer as a percentage rounded to two decimal places without % sign. eg 2.889% would be written 2.89)

What is the value (to the nearest cent) of a 4 year 8.6% coupon bond with a face value of $1,000. The yield-to-maturity on the bond is 5.3% and the bond makes semi-annual coupon payments.

Select one:

Jill is interested in a 9-year bond which pays a coupon of 4.1 percent annually and trades at a yield of 14.7% per annum. The face value is $1,000. What is the current price of this bond? (to the nearest cent)

Select one:

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Jill wants to invest in a four-year bond that pays a coupon of 11 percent annually. The bonds are selling at $962.13 today and have a face value of $1,000. If she buys this bond and holds it to maturity, what would be the yield? (USE EXCEL or FINANCIAL CALCULATOR. Round to the closest answer.)

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Which one of the following statements about the approach to bond pricing is NOT true?

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#### Question text

Which one of the following statements is NOT true?

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Which ONE of the following statements is NOT true?

Select one:

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#### Question text

Which one of the following statements is NOT true?

Select one: