# 7 what is the market rate a yield on the issue date b amount to be repaid at maturit 4350959

7) What is the market rate?

A) Yield on the issue date.

B) Amount to be repaid at maturity.

C) Rate of return earned by the investor.

D) Interest rate specified in the bond indenture.

8) What is the effective interest rate?

A) Yield on the issue date.

B) Amount to be repaid at maturity.

C) Rate of return earned by the investor.

D) Interest rate specified in the bond indenture.

9) When will bonds sell at a premium?

A) When the coupon rate is equal to the par value.

B) When the coupon rate is below the market rate.

C) When the coupon rate is above the market rate.

D) When the coupon rate is equal to market value.

10) When will bonds sell without a premium or discount?

A) When the coupon rate equals the par value.

B) When the coupon rate is below the market rate.

C) When the coupon rate is above the market rate.

D) When the coupon rate is equal to the market rate.

11) A \$100,000 5-year 6% bonds bond is issued on January 1, 2012. The bond pays interest annually. The market rate is 7%. What is the discount or premium of the sale of the bonds, rounded to nearest dollar?

A) \$4,500 discount

C) \$95,500

D) \$100,000

12) A \$100,000 5-year 6% bonds bond is issued on January 1, 2012. The bond pays interest annually. The market rate is 8%. What is the selling price of the bonds, rounded to nearest dollar?

A) \$7,986

B) \$92,014

C) \$100,000

D) \$108,425

13) A \$100,000 5-year 7% bonds bond is issued on January 1, 2012. The bond pays interest annually. The market rate is 6%. What is the selling price of the bonds, rounded to nearest dollar?

A) \$4,213

B) \$95,500

C) \$100,000

D) \$104,213

14) A \$100,000 5-year 7% bonds bond is issued on January 1, 2012. The bond pays interest annually. The market rate is 6%. What is the selling premium or discount on the bonds, rounded to nearest dollar?

A) \$4,213 discount 