MBA 702 Module 3
Allison just received the semiannual payment of $35 on a bond she owns. Which term
refers to this payment? - answer Coupon
Bert owns a bond that will pay him $45 each year in interest plus $1,000 as principal
payment at maturity. What is the $1,000 called? - answerFace value
A bond's principal is repaid on the ____________ date - answer maturity
Which one of these equations applies to a bond that currently has a market price that
exceeds par value? - answerYield to maturity < Coupon rate
Which one of the following relationships is stated correctly? - answer Decreasing the
time to maturity increases the price of a discount bond, all else constant
The price sensitivity of a bond increases in response to a change in the market rate of
interest as the: - answercoupon rate decreasies and the time to maturity increases
Road Hazards has 12-year bonds outstanding. The interest payments on these bonds
are sent directly to each of the individual bondholders. These direct payments are a
clear indication that the bonds can accurately be defined as being issued: - answerin
registered form
A sinking fund is managed by a trustee for which one of the following purposes? -
answerearly bond redemption
A $1,000 face value bond can be redeemed early at the issuer's discretion for $1,030,
plus any accrued interest. The additional $30 is called the: - answercall premium
A deferred call provision: - answerprohibits the bond issuer from redeeming callable
bonds prior to a specified date.
Municipal bonds: - answerpay interest that is federally tax-free
A zero coupon bond: - answerhas more interest rate risk than a comparable coupon
bond
Which one of the following risks would a floating-rate bond tend to have less of as
compared to a fixed-rate coupon bond? - answerinterest rate risk
A highly illiquid bond that pays no interest but might entitle its holder to rental income
from an asset is most apt to be a: - answersukuk
Allison just received the semiannual payment of $35 on a bond she owns. Which term
refers to this payment? - answer Coupon
Bert owns a bond that will pay him $45 each year in interest plus $1,000 as principal
payment at maturity. What is the $1,000 called? - answerFace value
A bond's principal is repaid on the ____________ date - answer maturity
Which one of these equations applies to a bond that currently has a market price that
exceeds par value? - answerYield to maturity < Coupon rate
Which one of the following relationships is stated correctly? - answer Decreasing the
time to maturity increases the price of a discount bond, all else constant
The price sensitivity of a bond increases in response to a change in the market rate of
interest as the: - answercoupon rate decreasies and the time to maturity increases
Road Hazards has 12-year bonds outstanding. The interest payments on these bonds
are sent directly to each of the individual bondholders. These direct payments are a
clear indication that the bonds can accurately be defined as being issued: - answerin
registered form
A sinking fund is managed by a trustee for which one of the following purposes? -
answerearly bond redemption
A $1,000 face value bond can be redeemed early at the issuer's discretion for $1,030,
plus any accrued interest. The additional $30 is called the: - answercall premium
A deferred call provision: - answerprohibits the bond issuer from redeeming callable
bonds prior to a specified date.
Municipal bonds: - answerpay interest that is federally tax-free
A zero coupon bond: - answerhas more interest rate risk than a comparable coupon
bond
Which one of the following risks would a floating-rate bond tend to have less of as
compared to a fixed-rate coupon bond? - answerinterest rate risk
A highly illiquid bond that pays no interest but might entitle its holder to rental income
from an asset is most apt to be a: - answersukuk
