Chapter 4

Question 1

Stated value from the firms balance sheet

Answer 1

Book value

Question 2

Also called face value

Answer 2

Par value

Question 3

Time at which the maturity value is paid to the bondholder

Answer 3

Maturity

Question 4

The price for the asset at any given time determined by supply and deman in marketplace

Answer 4

Market value

Question 5

Present value of the asset’s expected cash flows

Answer 5

Intrinsic value

Question 6

Document which details the legal obligation of the corporation to the bondholders

Answer 6

Indenture

Question 7

Borrowers typically make periodic payments to the bondholders.

Answer 7

Coupon interest rate

Question 8

Is an application of present value

Answer 8

Bond valuation

Question 9

Is the present value of all cash flows of the investor receives as a result of holding the bond

Answer 9

Value of the bond

Question 10

Total return anticipated on a bond if its is held until matures

Answer 10

Yield to maturity

Question 11

Potential loss in value of an investment or asset

Answer 11

Interest rate risk