1. For a bond, the _______________ is multiplied by the bonds par or face value

to calculate the interest payment (PMT) that must be paid to the bondholder

periodically over the life of the bond.

1. nominal interest rate

2. effective annual rate (EAR)

3. coupon interest rate

4. inflation rate

2. A yield curve graphically shows the relationship between ________________

and ____________________ for outstanding debt securities at a given

point in time.

1. time to maturity; the percentage yield

2. debt; equity

3. the inflation rate; effective annual rate (EAR)

4. the inflation rate; the unemployment rate

3. _________________ are(is) a long-term debt instrument used by businesses and

government to raise large sums of money from investors.

1. Commercial paper

2. Marketable securities

3. Bonds

4. Common stock

4. Most bonds have the following characteristic(s):

1. They pay interest semi-annually (i.e., every six months) at a stated coupon

interest rate.

2. They have an initial maturity of 10 to 30 years.

3. They have a par value of $1,000 that must be repaid at maturity.

4. They are required to pay dividends every third year to the bondholders.

5. A and B and C and D.

6. A and B and C.