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© 2014 Pearson Canada Inc.#
What is the return on a 5 percent coupon bond that initially sells for $1,000 and sells for
$1,200 next year?
A) 5 percent
B) 10 percent
C) -5 percent
D) 25 percent
Answer: D
Diff: 2 Type: MC Page Ref: 75
Skill: Applied
Objective List: 4.2 Discern among the ways of measuring the interest rate
What is the return on a 5 percent coupon bond that initially sells for $1,000 and sells for $900
next year?
A) 5 percent
B) 10 percent
C) -5 percent
D) -10 percent
Answer: C
Diff: 2 Type: MC Page Ref: 75
Skill: Applied
Objective List: 4.2 Discern among the ways of measuring the interest rate
The return on a 5 percent coupon bond that initially sells for $1,000 and sells for $950 next
year is ____.
A) -10 percent
B) -5 percent
C) 0 percent
D) 5 percent
Answer: C
Diff: 2 Type: MC Page Ref: 75
Skill: Applied
Objective List: 4.2 Discern among the ways of measuring the interest rate
Suppose you are holding a 5 percent coupon bond maturing in one year with a yield to
maturity of 15 percent. If the interest rate on one-year bonds rises from 15 percent to 20 percent
over the course of the year, what is the yearly return on the bond you are holding?
A) 5 percent
B) 10 percent
C) 15 percent
D) 20 percent
Answer: C
Diff: 2 Type: MC Page Ref: 75
Skill: Applied
Objective List: 4.2 Discern among the ways of measuring the interest rate