A- Which bond has the most risk to an investor and which bond has the least risk to an investor?? (Assume they are all issued from the same company)

1) a callable, mortgage bond with a sinking fund

2) a callable, debenture

3) a convertible debenture

4) a debenture with a sinking fund

B- The market rate is

1) the true yield earned on a bond (the return investors require on a bond based on the bonds risk)

2) the rate multiplied times par value to determine the annual interest payment in dollars

3) used to determine par value

4) always zero

C- The coupon rate is

1) the true yield earned on a bond (the return investors require on a bond based on the bonds risk)

2) the rate multiplied times par value to determine the annual interest payment in dollars

3) used to determine par value

4) always zero

D- The risk that interest rates will increase causing bond prices to fall is called

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