Question 1

When you refer to a bond's coupon,you are referring to which one of the following?

Accepted Answer

A)  difference between the bid and the ask price
B)  principal amount of the bond
C)  annual interest divided by the current bond price
D)  annual interest payment
E)  difference between the purchase price and the face valueF) A) and D)
G) C) and D)

Question 2

The inflation premium:

Accepted Answer

A)  compensates investors for expected price increases
B)  increases the real return
C)  rewards investors for accepting interest rate risk
D)  is inversely related to the time to maturity
E)  remains constant over timeF) A) and B)
G) A) and C)

Question 3

The primary purpose of protective covenants is to help:

Accepted Answer

A)  convert bearer bonds into registered form
B)  reduce interest rate risk
C)  the issuer in case of default
D)  protect bondholders from issuer actions
E)  bondholders whose bonds are calledF) A) and B)
G) A) and C)

Question 4

An unsecured note is:

Accepted Answer

A)  long-term debt secured by part,or all,of the assets of the borrower
B)  debt that is secured by a borrower's accounts receivables
C)  unsecured debt that is generally payable within the next ten years
D)  a formal type of loan that is secured by real estate
E)  the written agreement which details the information relative to a bond issueF) B) and C)
G) A) and B)

Question 5

The yield to maturity on a discount bond is:

Accepted Answer

A)  less than both the current yield and the coupon rate
B)  greater than both the current yield and the coupon rate
C)  equal to the current yield but greater than the coupon rate
D)  less than the current yield but greater than the coupon rate
E)  equal to both the coupon rate and the current yieldF) A) and B)
G) A) and C)

Question 6

A bond that pays no regular interest payments is called a(n) _____ bond.

Accepted Answer

A)  income
B)  convertible
C)  exotic
D)  put
E)  zero couponF) B) and C)
G) B) and D)

Question 7

On which one of the following dates is the principal amount of a bond repaid?

Accepted Answer

A)  discount date
B)  issue date
C)  coupon date
D)  maturity date
E)  face dateF) A) and D)
G) B) and D)

Question 8

The interest rate of return that has not been adjusted for inflation is called:

Accepted Answer

A)  a nominal rate
B)  a yield to maturity
C)  a real rate
D)  a floating rate
E)  a coupon rateF) A) and B)
G) B) and D)

Question 9

The rate required in the market on a bond is called the:

Accepted Answer

A)  risk premium
B)  current yield
C)  yield to maturity
D)  call yield
E)  liquidity premiumF) A) and C)
G) A) and B)

Exam 6: Interest Rates and Bond Valuation

The yield to maturity on a discount bond is:

Correct Answer
verified

An unsecured note is:

Correct Answer
verified

A bond that pays no regular interest payments is called a(n) _____ bond.

Correct Answer
verified

The interest rate of return that has not been adjusted for inflation is called:

Correct Answer
verified

The primary purpose of protective covenants is to help:

Correct Answer
verified

On which one of the following dates is the principal amount of a bond repaid?

Correct Answer
verified

When you refer to a bond's coupon,you are referring to which one of the following?

Correct Answer
verified

The inflation premium:

Correct Answer
verified

The rate required in the market on a bond is called the:

Correct Answer
verified

Exam 6: Interest Rates and Bond Valuation

The yield to maturity on a discount bond is:

Correct AnswerverifiedShow Answer

An unsecured note is:

Correct AnswerverifiedShow Answer

A bond that pays no regular interest payments is called a(n) _____ bond.

Correct AnswerverifiedShow Answer

The interest rate of return that has not been adjusted for inflation is called:

Correct AnswerverifiedShow Answer

The primary purpose of protective covenants is to help:

Correct AnswerverifiedShow Answer

On which one of the following dates is the principal amount of a bond repaid?

Correct AnswerverifiedShow Answer

When you refer to a bond's coupon,you are referring to which one of the following?

Correct AnswerverifiedShow Answer

The inflation premium:

Correct AnswerverifiedShow Answer

The rate required in the market on a bond is called the:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified