Practice Questions

Which of the following statements about zero-coupon bonds is correct?

Select one:

a. A zero-coupon bond with a 2% yield to maturity will trade at a premium.

b. Other things being equal, a zero-coupon bond with a longer maturity date has a higher price.

c. Other things being equal, a zero-coupon bond with a higher yield to maturity to maturity has a lower price

d. The yields to maturity of zero-coupon bonds are always lower than that of coupon bonds.

In a typical underwriting arrangement

Select one:

a. the company bears the risk that an IPO will be overpriced.

b. the underwriter agrees to sell shares to customers at a market price.

c. the underwriter agrees to compensate the company for under-pricing.

d. the underwriter bears the risk that the IPO will be under-subscribed.