Reference no: EM132375443
1. Cut and paste the definitions in Table 1 to their corresponding definitions in Table 2.
Table 1.
Limits issuer actions that may endanger repayment of the bonds
Years until the issuer must repay the money borrowed
States that the issuer may repurchase the bonds prior to maturity at specific times and prices
Return on a bond purchased today and held for one year
Value stated on face of bond
Annuity providing a future amount
Table 2.
Maturity
Face value
Current yield
Sinking fund
Call provision
Restrictive covenant
Morgan Stanley has a 3-year, 4.9% bond with a yield to maturity of 4.03%.
2. What is the price of the bond?
3. Is the bond selling at a premium or a discount?
4. What is the current yield on this bond?
Capital One has a 7-year, 8.9% bond issue selling for $991.78.
5. What is the yield to maturity on this bond?
6. Is the bond selling at a premium or a discount?
7. What is the current yield on this bond?