F10

Question 1

bond

Answer 1

a security sold by government or corporation to raise money form investors today in exchange for promised money in the future

Question 2

bond certificate

Answer 2

amounts and dates of all payments

Question 3

maturity date

Answer 3

final repayment date

Question 4

term of the bond

Answer 4

time remaining until repayment date

Question 5

coupons

Answer 5

promised interest payments

Question 6

face value

Answer 6

notional amount to compute interest payments

Question 7

coupon rate

Answer 7

amount of face value that the coupon will pay

Question 8

CPN

Answer 8

coupon payment

face value*coupon rate

Question 9

zero-coupon bond

Answer 9

don’t have coupon payments
has discount
only ace value of bond on maturity date

Question 10

treasury bonds

Answer 10

us government bonds with maturity uo to two years

zero-coupon

Question 11

yield to maturity

Answer 11

total return on a bond if you hold it until maturity

Question 12

spot interest rate

Answer 12

default-free, zero-coupon yield

risk-free interest rate

Question 13

coupon bonds

Answer 13

pay face value at maturity and regular coupon interest payments

Question 14

difference treasury bond and treasury notes

Answer 14

notes are from 1-10 years

bonds are more than 10 years

Question 15

premium

Answer 15

price greater than face value

Question 16

par

Answer 16

price equal to face value

Question 17

credit risk

Answer 17

risk of default when buying corporate bonds

uncertain cash flow

Question 18

bond ratings

Answer 18

give informations to investors about creditworthiness of bonds
Investment grade debt (AAA,AA,A,BBB)
Speculative bonds (BB,B,CCC,CC,C,D)
Junk bonds 
High yield bonds

Question 19

credit spread

Answer 19

yield for treasury-yield for corporate bond

the bigger difference, the riskier bond