Question

The following bonds have five years left until they mature. Which bond could provide the highest return over five years? Assume the bonds are the same in all respects except for their coupons.

Issuer Coupon (% per annum)
City of Chicago, IL 5.00
District of Columbia 5.25
Port Authority of New York & New Jersey 4.25
State Of California 5.75



Select the best answer from the choices provided.
City of Chicago, IL
District of Columbia
Port Authority of New York & New Jersey
State of California

Answer 1

@zaibali.qasmi

Answer 2

@zaibali.qasmi what you think?

Answer 3

its C...

Answer 4

Thank you

Answer 5

Dillon can buy a fixed-rate bond with a 4% coupon, a $10,000 principal, and five years left to maturity or a TIPS with the same principal and age to maturity with a 2% coupon. Compare the two bonds if inflation runs 3% per year on average.


Select the best answer from the choices provided.
The fixed-rate bond has a better yield.
The TIPS has a better yield.
Both yields are roughly equivalent.
The yields vary with inflation.

Answer 6

@za

Answer 7

@zaibali.qasmi

Answer 8

D..

Answer 9

Arthur buys a zero coupon bond with a face value of $5,000 for $4,000. The bond has five years until it matures. How much would Arthur earn if he holds this bond to maturity?


Select the best answer from the choices provided.
$2,000
$1,000
$6,000
$7,000

Answer 10

@zaibali.qasmi

Answer 11

6000 i think it i..

Answer 12

its not B?

Answer 13

What is a coupon on a bond similar to?


Select the best answer from the choices provided.
rate of return on the stock market
appreciation rate of real estate
tax rate
All answers are correct.

Answer 14

@zaibali.qasmi

Answer 15

@zaibali.qasmi

Answer 16

i think all are correct..

Answer 17

@zaibali.qasmi You're very helpful

Answer 18

What additional information would be needed to compute which of the following Treasury bonds will pay the highest real yield?

Bond Type Principal Coupon Time To Maturity Selling price of the Bond
TIPS $15,000 2.2% 12 years $15,000
Fixed-Rate $30,000 4.2% 16 years $30,000
Zero Coupon $25,000 0% 15 years $20,000



Select the best answer from the choices provided.
how index rates will perform
what inflation will be
the ratings of the bonds
how the bonds will be taxed

Answer 19

@zaibali.qasmi

Answer 20

@zaibali.qasmi

Answer 21

Bond Type Principal Coupon Time To Maturity Selling price of the Bond
TIPS $15,000 2.2% 12 years 15,000
Fixed-Rate $30,000 4.2% 16 years $30,000
Zero Coupon $25,000 0% 15 years $20,000

Answer 22

@zaibali.qasmi what you think.. its B

Answer 23

@zaibali.qasmi Treasury bonds can't get taxed

Answer 24

Variable interest rate bonds give a higher yield than fixed-rate bonds when interest rates rise and a lower yield when rates fall.