Chapter 2

Question 1

If a customer buys a 6% bond maturing in eight years on a 7.33 basis, the price of the bond is

Answer 1

Below par - A bond with a basis, or yield to maturity, greater than its coupon is trading at a discount, or below par.

A bond with a basis, or yield to maturity, is less than it’s coupon is trading above par

Question 2

Most convertible securities are sold with antidilutive clauses that provide for

Answer 2

an adjustment in the number of shares based on stock splits or stock dividends.

Question 3

What rate of interest would a bank in England charge another British bank for a short-term loan?

Answer 3

SOFR / LIBOR

London Interbank Offered Rate

Question 4

Basis vs yield

Answer 4

Each basis point is .01%
7.33 basis =

Question 5

time deposit account

Answer 5

think CD
Money is deposited for a fixed length of time, generally at a fixed interest rate.