FNB 100 Assessment 1. Bond prices are quoted in terms of which of the following? A. %ofpar value B. coupon rate in D, original issue discount C. market rate in dollars dollars 2This is defined as the portion of total risk that is attributable to firm or industry factors and can be reduced through diversification. A. market risk B. modern C. total risk D. firm-specific portfolio risk risk 3. Which of the following statements is true? A. Interest payments paid to municipal bond holders are not taxed at the federal level, or by the state for which the bond is issued B. Interest payments paid to corporate bond holders are not taxed at the state level. C. Interest payments paid to corporate bond holders are not taxed at the federal level. D. Interest payments paid to U.S. Treasury bond holders are not taxed at the federal level. 4. Which of the following is NOT a factor that determines the coupon rate of a company's bonds? A. The amount of uncertainty about whether the company will be able to make all the payments. The term of the loan. B. C. All of these are factors that determine the coupon rate of a company's bonds. D. The level of interest rates in the overall economy at the time. 5. Which of the following terms means that during periods when interest rates change substantially, bondholders experience distinct gains and losses in their bond investments? B. credit quality C. liquidity rate D. reinvestment rate risk A. interest rate risk 6. Which of the following is an important advantage to the issuer of a bond with a call provision? A. They are able to avoid interest rate risk. B. They allow for refinancing opportunities C. They are able to reduce their credit risk. D. They are able to avoid reinvestment rate risk. 7. This is a measurement of the co-movement btwn two variables that ranges between -1& +1 A. STDEV B. total risk C. CoV D. correlation 8. To compensate the bondholders for getting the bond called, the issuer pays which of the following? A. coupon rate B. original issue premium C. call premium D. call feature 9. Which of the following is a debt security whose payments originate from other loans, such as credit card debt, auto loans, and home equity loans? A. debentures B. junk bonds C. credit quality securities D. asset-backed securities 10. This is the term for portfolios with the highest return possible for each risk level