Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
1. Which of these statements is false?
2. Bonds are issued by which of the following?
3. Which of these statements answers why bonds are known as fixed income securities?
4. Which of the following is a legal contract that outlines the precise terms between the
issuer and the bondholder?
5. Regarding a bond's characteristics, which of the following is the principal loan amount
that the borrower must repay?
6. To compensate the bondholders for getting the bond called, the issuer pays which of the
following?
7. Which of the following determines the dollar amount of interest paid to bondholders?
8. Bond prices are quoted in terms of which of the following?
9. Which of the following are main issuers of bonds?
10. Which of the following statements is true?
11. Which of the following issues Treasury Inflation Protected Securities (TIPS)?
12. Which of the following is true regarding U.S. Government Agency Securities?
13. Which of the following is a debt security whose payments originate from other loans,
such as credit card debt, auto loans, and home equity loans?
14. Which of the following is NOT a factor that determines the coupon rate of a company's
bonds?
15. Which of the following bonds makes no interest payments?
16. Which of the following is a true statement?
17. Which of the following terms means that during periods when interest rates change
substantially, bondholders experience distinct gains and losses in their bond investments?
18. Which of the following terms means the chance that future interest payments will have to
be reinvested at a lower interest rate?
19. Which of the following terms is a comparison of market yields on securities, assuming all
characteristics except maturity are the same?
20. A bond's current yield is defined as:
21. Which of the following is an important advantage to the issuer of a bond with a call
provision?
22. Which of the following is a reason municipal bonds offer lower rates of interest income
for their investors?
7-12
23. Which of the following terms is the chance that the bond issuer will not be able to make
timely payments?
24. Which of the following bonds carry significant risk that the issuer will not make current or
future payments?
25. Interest Payments Determine the interest payment for the following three bonds: 5.5
percent coupon corporate bond (paid semi-annually), 6.45 percent coupon Treasury note, and a
corporate zero coupon bond maturing in 10 years. (Assume a $1,000 par value.)
26. Interest Payments Determine the interest payment for the following three bonds: 2.5
percent coupon corporate bond (paid semi-annually), 3.15 percent coupon Treasury note, and a
corporate zero coupon bond maturing in 10 years. (Assume a $1,000 par value.)
27. Interest Payments Determine the interest payment for the following three bonds: 4
percent coupon corporate bond (paid semi-annually), 4.75 percent coupon Treasury note, and a
corporate zero coupon bond maturing in 15 years. (Assume a $1,000 par value.)
28. Time to Maturity A bond issued by a corporation on June 15, 2007, is scheduled to
mature on June 15, 2017. If today is December 16, 2008, what is this bond's time to maturity?
(Assume annual interest payments.)
29. Time to Maturity A bond issued by a corporation on May 1, 1999, is scheduled to mature
on May 1, 2019. If today is May 2, 2009, what is this bond's time to maturity? (Assume annual
interest payments.)
30. Time to Maturity A bond issued by a corporation on October 1, 2007, is scheduled to
mature on October 1, 3007. If today is October 2, 2009, what is this bond's time to maturity?
(Assume annual interest payments.)
31. Call Premium A 5.5 percent corporate coupon bond is callable in four years for a call
premium of one year of coupon payments. Assuming a par value of $1,000, what is the price paid
to the bondholder if the issuer calls the bond? (Assume annual interest payments.)
32. Call Premium A 6 percent corporate coupon bond is callable in 10 years for a call
premium of one year of coupon payments. Assuming a par value of $1,000, what is the price paid
to the bondholder if the issuer calls the bond?
