topic 4 Bonds

Question 1

what are bonds

Answer 1

bonds are debt obligations involving a Laon followed by repayment with interests

Question 1

most bonds are less risky than stocks (true or false? )

Answer 1

true- unless there high yield

Question 2

why are bonds issued

Answer 2

to fund projects by the governments or corporations

Question 3

bonds are defined by 4 main characteristics

Answer 3

issue and maturity dates

call feature

coupon rate

Par value (or face value or redemption value)

Question 4

examples of bond issuers

Answer 4

us treasury

local governments

corporations

Question 5

what dose (TIPS) stand for

Answer 5

Treasury Inflation-Protected Securities

Question 6

why U.S. government agency issue securities

Answer 6

to provide low-cost financing for private-sector activities such as home ownership,
education, and farming

Mortgage-backed securities (and other asset- backed securities)

Question 7

how do you determined the price of a bond-(its the same for all asset)

Answer 7

its feature cash flow, discounted by the present interests rate

pv=fv/(1+i)*n

Question 8

reading bond quotes

Question 9

Credit ratings assess this risk

Answer 9

Investment-grade bonds are AAA, AA, A or BBB rated

Junk bonds (high-yield) are rated BB and below

Question 10

bond’s yield reflects what?

Answer 10

its credit risk

Question 11

key differences in bonds market vs stock markets

Answer 11

is that there is no broker and the transaction are form dealer to client