3, A bond that has a price of $1090 and a yield of 7% must have a coupon rate that is a bond that has a price of $990 and a yield of 7%. An account with an interest rate of 1% monthly must have an EAR that is higherthan/lowerthan/eaualto an account with an interest rate of 3% paid quarterly. higherthan/lowerthan 4, Multiple Choice, 20 points, 5 points each. Circle the correct answer. 5. The coupon rate on a bond is (Circle all that apply. You may choose more than one.) a. b. c. d. the bond's interest payment expressed as a percentage of par value. greater than the yield to maturity when the bond sells at a discount. equal to the market's required return on the bond when the bond is selling for $1000. the bond's annual interest payment divided by the bond's price. 6. The total value of a bond is equal to the: (CHOOSE ONE) a. b. c. d. e. future value of the coupon payments plus the face value. present value of all the future cash flows related to that bond. face value plus the present value of the coupon payments. coupon payments plus the present value of the face amount. par value plus the future value of the coupon payments. 7. Which of the following is FALSE about municipal bonds? (CHOOSE ONE.) Municipal Bonds may offer a lower yield to maturity than a similar corporate bond because it has a tax advantage. Municipal bonds are rated for default risk like corporate bonds. All investors should always prefer a municipal bond over a corporate bond because of the tax advantage Municipal bonds are often preferred by wealthy investors who pay a high tax rate. a. b. c. d