32. Suppose you are considering buying a six-year 10% coupon bond with a face value of $1,000 and a current price of $1,100. What are the current yield and yield to maturity of this bond?(a) CY = 11.00%; YTM = 12.23%(b) CY = 12.23%; YTM = 11.00%(c) CY = 7.85%; YTM = 9.09%(d) CY = 9.09%; YTM = 7.85% Answer (d)33. Suppose you are considering buying a seven-year 11% coupon bond with a face value of $1,000 and a current price of $950. What are the current yield and yield to maturity of this coupon bond?(a) CY = 12.10%; YTM = 11.58%(b) CY = 11.58%; YTM = 12.10%(c) CY = 9.92%; YTM = 10.45%(d) CY = 10.45%; YTM = 9.92% Answer: (b)34. Over time bond prices ________ their face value. Before maturity, bond prices can ________ a great deal as a result of changes in market interest rates.(a) diverge from; fluctuate(b) converge toward; flatten out(c) converge toward; fluctuate(d) diverge from; flatten out Answer: (c)35. When the yield curve is not flat, bonds of the same ________ with different coupon rates have ________ yields to maturity.(a) maturity, different(b) maturity, identical(c) callability, different(d) callability, identical Answer: (a)36. Bonds offering the same future stream of promised payments can differ in a number of ways, but the two most important are ________ and ________.(a) taxability, issue origin(b) type of issuer, default risk(c) type of issuer, taxability(d) taxability, default risk Answer: (d)37. A ________ is one that gives the holder of a bond issued by a corporation the right to convert the bond into a pre-specified number of shares of common stock.(a) callable bond(b) convertible bond(c) stock bond(d) preferred bond Answer: (b)38. A ________ is one that gives the issuer of the bond the right to redeem it before the final maturity date.(a) callable bond(b) convertible bond(c) stock bond(d) preferred bond Answer: (a)39. Five years ago, English and Co. issued 25-year coupon bonds with par value $1,000. At the time of issuance, the yield to maturity was 6 percent and the bonds sold at par. The bonds are currently selling at 110 percent of their par value. Assuming that the coupon is paid annually, what is the current yield to maturity?(a) 3.77%(b) 5.18%(c) 5.27%(d) 5.46% Answer: (b)