Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question.
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1.
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A
£100 bond is issued at a discount of £96 what is the rate of discount and the rate of
return on the bond? a. | 4.17%,4.17% | c. | 4.17%, 4% | b. | 4%,4% | d. | 4%,
4.17% | | | | |
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2.
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If a
five year fixed interest bond is trading at its par value and the coupon rate is 7 per cent what is
the yield on the bond?
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3.
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If a
five year bond has a market value of £95 and pays 6 per cent coupon twice yearly what is its
yield?
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4.
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The
dirty price of a bond is: a. | Clean price plus accrued
interest | c. | The original
issue price | b. | Clean price - accrued interest | d. | The price if no interest is paid | | | | |
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5.
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STRIPS stands for: a. | The separate trading of interest and
principal | c. | The separate
trading of intermediated prices | b. | The separate trading of income and
price | d. | The separate
trading of intermediate priced securities | | | | |
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