Aanbod Nens No - Homework Assignment #61 DUE NOVEMBER 2020 15 questions. 1 point per question. 15 points possible. Possible 3-5 POINTS EXTRA CREDIT for Number 16 AND more for well-written / model answers) Note, some questions may have more than one part. Answer all parts precisely and succinctly. Questions drawn from Chap 6 readings and class material. Chapter 6 - Interest Rates and Bond Evaluation 1. Is it true that a U.S. Treasury security is risk free? Explain. 2. Interest rate risk. Which has greater interest rate risk, a 30-year Treasury I bond or a 30-year BB corporate bond? 3. A Call Provisions. A company is contemplating a long-term bond issue. It is debating whether or not to include a call provision. What are the benefits to the company from including a call provision? What are the costs? How do these answers change for a put provision? 4. Coupon Rate. How does a bond issuer decide on the appropriate coupon rate to set on its bonds? Explain the difference between the coupon rate and the required return on a bond. Generally 3-5 POINTS EXTRA CREDIT for Number 16: 16. During severe inflationary times, would the Fisher Effect be an important Point Layout View Suc Pages: 103 Words 156 al 363 Text Box Shane Pletur 5. Define "Coupon" In relation to bond terminology. 6. Define Par value. What is Par value also called? 7. Define Indenture. What is Indenture sometimes called? Pg 177 8. List 6 Details that are usually included in the Indenture. Pg 177 9. What is the "sinking fund"? Why is the sinking fund used? 10. What is the "call provision" in a bond? P 179 11. What are Standard and Poors Highest and lowest rated bond ratings? P8 181 What are Moody's highest rated and lowest bond ratings? 12. What is TRACE? What improved dramatically under TRACE? 13.What is FINRA? How can FINRA be helpful for the investor? 14. What is the Fisher effect? What does the formula adjust for? P191 15. What are the six components that make up bond yield? P195 1009 Generally 3-5 POINTS EXTRA CREDIT for Number 16: 16. During severe inflationary times, would the Fisher Effect be an important consideration when deciding to buy a $100,000 car on a loan with an adjustable interest rate tied to the Consumer Price Index? WHY - please explain Print Layout View Soc Pages: 3 of 3 Words: 363 of 363 MacB 0 . 03 FI DOO DOO i F2 F3 F4 F5 A # 3 $ 4 % 5 N 6