33. All treasury securities have a yield to maturity of 7 percent--so the yield curve is flat. If the yield to maturity on all Treasuries were to decline to 6 percent, which of the following bonds would have the largest percentage increase in price? a. 15-year zero coupon Treasury bond. b. 12-year Treasury bond with a 10 percent annual coupon. c. 15-year Treasury bond with a 12 percent annual coupon. d. 2-year zero coupon Treasury bond. e. 2-year Treasury bond with a 15 percent annual coupon.

7.6 For a particular bond market, zero-coupon bonds with face value $100, re-deemable at par, are priced as follows: • bonds redeemable in exactly 1 year are priced at $98, • bonds redeemable in exactly 2 years are priced at $93, • bonds redeemable in exactly 3 years are priced at $89, • bonds redeemable in exactly 4 years are priced at $85.50. Find the yield to maturity of a bond redeemable at 103% of the face value in 4 years with annual coupons of 5%.

The real risk-free rate is 3 percent. Inflation is expected to average 2 percent a year for the next 3 years, after which the inflation is expected to average 3.5 percent a year. Assume that there is no maturity risk premium. A 7-year corporate bond has a yield of 7.6 percent. Assume that the liquidity premium on the corporate bond is 0.4 percent. What is the default risk premium on the corporate bond?

Refer to Table 10-2.   a. Assume the interest rate in the market (yield to maturity) goes down to 8 percent for the 10 percent bonds. Using column 2, indicate what the bond price will be with a 10-year, a 20-year, and a 25-year time period.       b. Assume the interest rate in the market (yield to maturity) goes up to 12 percent for the 10 percent bonds. Using column 3, indicate what the bond price will be with a 10-year, a 20-year, and a 25-year period.       c. Assume the interest rate in the market (yield to maturity) goes down to 8 percent for the 10 percent bonds. If interest rates in the market are going down, which bond would you choose to own?   multiple choice 1 10 Years 20 Years 25 Years   d. Assume the interest rate in the market (yield to maturity) goes up to 12 percent for the 10 percent bonds. If interest rates in the market are going up, which bond would you choose to own?   multiple choice 2 10 Years 20 Years 25 Years

22. You are considering two Treasury bonds. Bond A has a 9 percent annualcoupon, and Bond B has a 6 percent annual coupon. Both bonds have ayield to maturity of 7 percent. Assume that the yield to maturity isexpected to remain at 7 percent. Which of the following statements ismost correct?a. If the yield to maturity remains at 7 percent, the price of bothbonds will increase by 7 percent per year.b. If the yield to maturity remains at 7 percent, the price of bothbonds will increase over time, but the price of Bond A will increaseby more.c. If the yield to maturity remains at 7 percent, the price of bothbonds will remain unchanged.d. If the yield to maturity remains at 7 percent, the price of Bond Awill decrease over time, but the price of Bond B will increase overtime.e. If the yield to maturity remains at 7 percent, the price of Bond Bwill decrease over time, but the price of Bond A will increase overtime.

Suppose 1-year Treasury bonds yield 4.40% while 2-year T-bonds yield 5.70%. Assuming the pure expectations theory is correct, and thus the maturity risk premium for T-bonds is zero, what is the yield on a 1-year T-bond expected to be one year from now? Do not round your intermediate calculations. Round your final answer to 2 decimal places. a. 7.02% b. 5.66% c. 5.05% Od. 4.92% e. 7.32%

am. 49.

19. Help me selecting the right answer. Thank you