Question 1 of 25

1.0 Points

The rate of return required by investors for owning a bond to its maturity is called the

A. coupon rate.
B. current yield.
C. par rate.
D. yield to maturity.

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Question 2 of 25

1.0 Points

Which of the following statements regarding bond terminologies is INCORRECT?

A. The written, legally binding agreement between the corporate borrower and the lender detailing the terms of a bond issue is called the indenture.
B. The unsecured long-term debts of a firm are commonly called debentures.
C. A special account that sets aside periodic payments for bond redemption is called a sinking fund.
D. An agreement giving the bond issuer the option to repurchase the bond at a specified price prior to maturity is called the zero provision.

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Question 3 of 25

1.0 Points

Which of the following statements regarding bond trading is INCORRECT?

A. The long-term bonds issued by the U.S. government are called Treasury Bills.
B. The long-term bonds issued by state and local governments in the United States are called municipal bonds.
C. A bond that makes no coupon payments (and thus is initially priced at a deep discount) is called a zero coupon bond.
D. The price a dealer is willing to pay for a security is called the bid price.

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Question 4 of 25

1.0 Points

Which bond would most likely possess the least degree of interest rate risk?

A. 8% coupon rate, 15 years to maturity
B. 10% coupon rate, 10 years to maturity
C. 12% coupon rate, 8 years to maturity
D. 8% coupon rate, 12 years to maturity

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Question 5 of 25

1.0 Points

What is the value of a bond that will pay a total of 50 semiannual coupons of $80 each over the remainder of its life? The yield to maturity is 12%, p.a. Note: B = C [{1