Econ 3371 Eco of Money & Banking

All of the following are examples of coupon bonds EXCEPT a. U.S. Treasury bonds. b. corporate bonds. c. U.S. Treasury bills. d. U.S. Treasury notes.

U.S. Treasury bills.

Economists consider the ________ to be the most accurate measure of interest rates. a. real interest rate. b. simple interest rate. c. current yield. d. yield to maturity.

yield to maturity.

A discount bond is also called a ________ because the owner does not receive periodic payments. a. municipal bond b. consol c. zero-coupon bond d. corporate bond

zero-coupon bond

With an interest rate of 6 percent, the present value of $100 next year is approximately a.$106. b.$100. c. $94. d. $92.

$94.

A $1000 face value coupon bond with a $60 coupon payment every year has a coupon rate of a. .6 percent. b. 6 percent. c. 5 percent. d. 10 percent.

6 percent.

Which of the following $1,000 face-value securities has the lowest yield to maturity? a. a 15 percent coupon bond selling for $1,000 b. a 10 percent coupon bond selling for $1,000 c. a 15 percent coupon bond selling for $900 d. a 5 percent coupon bond selling for $1,000

a 5 percent coupon bond selling for $1,000

A credit market instrument that pays the owner a fixed coupon payment every year until the maturity date and then repays the face value is called a a. fixed-payment loan. b. simple loan. c. discount bond. d. coupon bond.

coupon bond.

The nominal interest rate minus the expected rate of inflation a. is a less accurate indicator of the tightness of credit market conditions than is the nominal interest rate. b. defines the real interest rate. c. defines the discount rate. d. is a less accurate measure of the incentives to borrow and lend than is the nominal interest rate.

defines the real interest rate.

The present value of an expected future payment ________ as the interest rate increases. a. is constant b. falls c. rises d. is unaffected

falls

A credit market instrument that requires the borrower to make the same payment every period until the maturity date is known as a a. discount bond. b. coupon bond. c. simple loan. d. fixed-payment loan.

fixed-payment loan.

There is ________ for any bond whose time to maturity matches the holding period. a. a large interest-rate risk b. rate-of-return risk c. yield-to-maturity risk d. no interest-rate risk

no interest-rate risk

Another name for a consol is a ________ because it is a bond with no maturity date. The owner receives fixed coupon payments forever. a. municipality b. high-yield bond c. perpetuity d. discount bond

perpetuity

The ________ is defined as the payments to the owner plus the change in a security's value expressed as a fraction of the security's purchase price. a. rate of return b. yield to maturity c. current yield d. yield rate

rate of return