Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
43.
Which of the following increase the price sensitivity of a bond to changes in
interest rates?
I. increase in time to maturity
II. decrease in time to maturity
III. increase in coupon rate
IV. decrease in coupon rate
44.
Which one of the following bonds is the least sensitive to interest rate risk?
45.
As a bond's time to maturity increases, the bond's sensitivity to interest rate
risk:
46.
You own a bond that has a 6 percent annual coupon and matures 5 years
from now. You purchased this 10-year bond at par value when it was
originally issued. Which one of the following statements applies to this bond
if the relevant market interest rate is now 5.8 percent?
47.
You expect interest rates to decline in the near future even though the bond
market is not indicating any sign of this change. Which one of the following
bonds should you purchase now to maximize your gains if the rate decline
does occur?
48.
A 6 percent, annual coupon bond is currently selling at a premium and
matures in 7 years. The bond was originally issued 3 years ago at par.
Which one of the following statements is accurate in respect to this bond
today?
49.
Which of the following statements concerning bonds are correct?
I. Bonds provide tax benefits to issuers.
II. The risk of a firm financially failing increases when the firm issues bonds.
III. Most long-term bond issues are referred to as unfunded debt.
IV. All bonds are treated equally in a bankruptcy proceeding.
50.
Texas Foods has a 6 percent bond issue outstanding that pays $30 in
interest every March and September. The bonds are investment grade and
sell at par. The bonds are callable at a price equal to the present value of all
future interest and principal payments discounted at a rate equal to the
comparable Treasury rate plus 0.50 percent. Which of the following
correctly describe the features of this bond?
I. bond rating of B
II. "make whole" call price
III. $1,000 face value
IV. offer price of $1,000
51.
Last year, Lexington Homes issued $1 million in unsecured, non-callable
debt. This debt pays an annual interest payment of $55 and matures 6 years
from now. The face value is $1,000 and the market price is $1,020. Which
one of these terms correctly describes a feature of this debt?
52.
Callable bonds generally:
53.
Which of the following are negative covenants that might be found in a bond
indenture?
I. The company shall maintain a current ratio of 1.10 or better.
II. No debt senior to this issue can be issued.
III. The company cannot lease any major assets without approval by the
lender.
IV. The company must maintain the loan collateral in good working order.
54.
Protective covenants:
55.
Which one of the following statements concerning bond ratings is correct?
56.
A "fallen angel" is a bond that has moved from:
57.
Bonds issued by the U.S. government:
58.
Treasury bonds are:
59.
Municipal bonds:
60.
The break-even tax rate between a taxable corporate bond yielding 7
percent and a comparable nontaxable municipal bond yielding 5 percent can
be expressed as:
61.
A zero coupon bond:
62.
Which one of the following risks would a floating-rate bond tend to have
less of as compared to a fixed-rate coupon bond?
63.
The collar of a floating-rate bond refers to the minimum and maximum:
