Question
1. For a bond, the _______________ is multiplied by the bonds par or face value to calculate the interest payment (PMT) that must be paid
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.
-
nominal interest rate
-
effective annual rate (EAR)
-
coupon interest rate
-
inflation rate
2. A yield curve graphically shows the relationship between ________________
and ____________________ for outstanding debt securities at a given
point in time.
-
time to maturity; the percentage yield
-
debt; equity
-
the inflation rate; effective annual rate (EAR)
-
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.
-
Commercial paper
-
Marketable securities
-
Bonds
-
Common stock
4. Most bonds have the following characteristic(s):
-
They pay interest semi-annually (i.e., every six months) at a stated coupon
interest rate.
-
They have an initial maturity of 10 to 30 years.
-
They have a par value of $1,000 that must be repaid at maturity.
-
They are required to pay dividends every third year to the bondholders.
-
A and B and C and D.
-
A and B and C.
-
-
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