Chapter 10 Questions

Question 1

A bond is the issuer’s written promise to pay the _____________ of the bond with interest

Answer 1

Par value

Question 2

Are bonds requiring payment of periodic interest and par value at maturity an advantage or disadvantage?

Answer 2

Disadvantage

Question 3

Bonds not affecting ownership is an advantage. True or False?

Answer 3

True

Question 4

If the contract rate is less than the market rate, the bond will sell at:

Answer 4

less than par (discount)

Question 5

If the contract rate is more than the market rate, the bond will sell at:

Answer 5

more than par (premium) Correct