Bonds ad their valuation

Question 1

A long-term debt instrument in which a borrower agrees to make payments of
principal and interest, on specific dates, to the holders of the bond.

Answer 1

Bond

Question 2

Bonds issued by the federal government, sometimes referred to as
government bonds

Answer 2

Treasury Bonds

Question 3

Bonds issued by corporations

Answer 3

Corporate Bonds

Question 4

. Bonds issued by state and local government.

Answer 4

Municipal Bonds

Question 5

Bonds issued by either foreign government or foreign corporations

Answer 5

Foreign Bonds.

Question 6

The face value of a bond.

Answer 6

Par Value

Question 7

The specified number of peso of interest paid each year

Answer 7

Coupon Payment

Question 8

The stated annual interest rate on a bond

Answer 8

Coupon Interest Rate

Question 9

A bond whose interest rate fluctuates with shifts in the general
level of interest rates

Answer 9

Floating-Rate Bond.

Question 10

A bond that pays no annual interest but is sold at a discount
below par, thus providing compensation to investors in the form of capital appreciation.

Answer 10

Zero-Coupon Bond

Question 11

Any bond originally offered at a price below its

par value.

Answer 11

Original Issue Discount (OID) Bond.

Question 12

A specified date on which the par value of a bond must be repaid

Answer 12

. Maturity Date

Question 13

A provision in a bond contract that gives the issuer the right to redeem
the bonds under specified terms prior to the normal maturity date.

Answer 13

. Call Provision

Question 14

A provision in a bond contract that requires the issuer to

retire a portion of the bond issue each year.

Answer 14

. Sinking Fund Provision

Question 15

A bond that is exchangeable, at the option of the holder, for the
issuing firm’s common stock

Answer 15

Convertible Bond

Question 16

A long-term option to buy a stated number of shares of common stock at a
specified price.

Answer 16

Warrant

Question 17

A bond with provisions that allow its investors to sell it back to the
company prior to maturity at a pre-arranged price.

Answer 17

Putable Bond

Question 18

A bond that pays interest only if it is earned

Answer 18

Income Bond

Question 19

A bond that has interest payments based on an

inflation index so as to protect the holder from inflation

Answer 19

Indexed (Purchasing Power) Bond.

Question 20

A bond that sells below its par value. It occurs whenever the growing
rate of interest is above the coupon rate.

Answer 20

Discount Bond

Question 21

A bond that sells above its par value. It occurs whenever the going
rate of interest is below the coupon rate

Answer 21

Premium Bond

Question 22

The rate of return earned on a bond if it is held to maturity

Answer 22

Yield to Maturity (YTM).

Question 23

The rate of return earned on a bond if it is called before its maturity
date

Answer 23

. Yield to Call (YTC).

Question 24

The annual interest payment on a bond divided by the bond’s current price

Answer 24

. Current Yield

Question 25

. A bond backed by fixed assets

Answer 25

. Mortgage Bond

Question 26

A formal agreement between the issuer and the bondholders

Answer 26

. Indenture

Question 27

A long-term bond that is not secured by a mortgage on specific property

Answer 27

. Debenture

Question 28

Bonds rated triple-B or higher

Answer 28

. Investment-Grade Bonds

Question 29

A high-risk, high-yield bond.

Answer 29

Junk Bond.

Question 30

treasury bond

Answer 30

government

Question 31

corporate bonds

Answer 31

corporations

Question 32

municipal bonds

Answer 32

state and local gov’t

Question 33

foreign bonds

Answer 33

foreign gov’t and corporation