7.If Trumped Towers, Inc.bonds are downgraded from AAA –to BBB+,which of the following statements about Trumped Towersbonds is(are) correct?

A.The current bond price will decrease.

B.The current bond price will increase

C.Interest rates required on new bond issues will decrease.

D.The current bond price will decrease and interest rates on newbonds issues will increase.

E.The current bond price will increase and interest rates on newbonds issues will decrease.

8.Which of the following statements is (are)correct?(x)Investors can follow the bond market prices by watchingprevailing market interest rates because interest rates and bondprices move in opposite directions.(y)If a bond is selling at parvalue, then the current yield must equal the coupon rateand thecurrent yield must equal the yield to maturity.(z)Ifacorporationwants to increase its debt ratioand interest rates haveincreased, then it is likely that the corporation will call itsbonds.

A.(x), (y) and (z)

B.(x) and (y) only

C.(x) and (z) only

D.(y) and (z) only

E.(z) only

16.Terrific Towels. Inc. issued a bond with a $1,000 face valueand a coupon rate of 6.5%. If the bond has a life of 19 years, payssemi-annual coupons, and the yield to maturity is 7.80%, what willthe bond sell for?

A. $794.45

B. $882.20

C. $872.28

D. $864.69

E. $404.93

17.Which of the following bonds will have the largest percentageincrease in value if interest rates decrease by 1%?

A.2-year, 5% coupon bond

B.30-year, 10% coupon bond

C.10-year, zero coupon

D.30-year, zero coupon

E.It is the same for all of the coupon