Zero coupon bonds Study guides, Class notes & Summaries

A bond with a face value of $1,000 that sells for less than $1,000 in the market is called a _____ bond. A) Par B) discount C) Premium D) Zero Coupon E) Floating rate - B) discount The _____ premium is that portion of the bond yield that represents compensation for potential difficulties that might be encountered should the bond holder wish to sell the bond prior to maturity. A) default risk B) taxability C) infaltion D) liquidity E) interest rate risk - D) liquidity All else consta...

A sovereign bond has a maturity of 20 years. The bond is best described as a: - ANSWER-capital market security A company has issued a floating-rate note with a coupon rate equal to the three-month Libor + 55 basis points. Interest payments are made quarterly on 31 March, 30 June, 30 September, and 31 December. On 31 March and 30 June, the three-month Libor is 1.55% and 1.35%, respectively. The coupon rate for the interest payment made on 30 June is: - ANSWER-2.10% A South African company i...

Bond Indenture - Answer- Contract that specifies all the rights and obligations of the issuer and owners of a fixed income security. Negative Covenants - Answer- Prohibitions on the borrower. Affirmative Covenants - Answer- Actions that the borrower promises to perform. Maturity or Term to Maturity - Answer- Length of time until loan contract or agreement expires. Remaining life of bond. Par Value - Answer- Amount borrower promises to pay on or before maturity date. Coupon Rate - ...

Real Return - Rate of growth in purchasing power of goods and services Holding Period Return - Return over the entire period that an investor owns a financial security Beta - A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. standard deviation - Used to measure the total risk of securities annuity due - an annuity whose payments occur at the beginning of each period, consecutively Par Bond - When the bond's coupon rate ...

Sophia Finance Milestone 2 1 Determine the value of a stock with the following variables using the constant growth model: Current annual dividend: $2.75 per share Required return rate: 8.5% Constant growth rate: 6% $110.00 $116.60 $119.35 $114.70 CONCEPT Stock Valuation 2 You would like to have $8,000 in an account after four years' time. If the account earns 4% compounded interest yearly, how much would you have to deposit today? $7,249 $6,838 $7,692 $6,897 CONCEPT Present Value, Single Cash F...

Trading on the NYSE is executed without a specialist (i.e. a market maker). True or False? - False Stocks and Bonds are two types of financial instruments. True or False? - True When revenue is matched with cost of sales in an Income statement it is called? - Matching principle Basic balance sheet equation is what? - Equity = Assets - Liabilities Why is the balance sheet known as the permanent statement? - Because the other statements are reset at the end of the fiscal year. How d...

When a bond is called, the bondholder receives the: - Answer- Call Price Plus Accrued Interest When issued, which security has a maturity of one year or less? - Answer- Money Markets Instruments Which shares of preferred stock may increase the most if the value of the company's common stock appreciates? - Answer- Convertible preferred stock Which of the following securities trades in fractional units of 1/32 of a point? - Answer- Treasury Bonds The OTC Bulletin Board (OTCBB) is BEST...

Trading on the NYSE is executed without a specialist (i.e. a market maker). True or False? - False Stocks and Bonds are two types of financial instruments. True or False? - True When revenue is matched with cost of sales in an Income statement it is called? - Matching principle Basic balance sheet equation is what? - Equity = Assets - Liabilities Why is the balance sheet known as the permanent statement? - Because the other statements are reset at the end of the fiscal year. How do you...

Crash Course on Bonds Exam Questions and Answers The US dominates the debt market and accounts for __ of global debt. - Answer-40% What is the market value of outstanding US bonds in 2015? - Answer-$18.4 trillion What is the difference between a bond and a loan? - Answer-Bonds are actively traded and loans are not unless they are securitized What is a bullet bond? - Answer-a vanilla, conventional bond What is a zero-coupon bond? - Answer-a bond that does not pay coupons What is...

If interest Rates fall the issuer will most likely call which bonds first? - High Dividend Rate preferred issues trading at a premium What are some actions by a corporation will affect an individuals common shareholder's equity - Conversion of convertible preferred stocks or bond Repurchase of common shares Issuance of additional common shares (Stock splits do not effect shareholders equity but it must be voted on because it effects Par Value) Benefits to a Convertible stock compar...