Finance (BADM 310) Chapter 7

All else constant, a bond will sell at _____ when the coupon rate is _____ the yield to maturity

a discount; less than

Protective covenants:

are primarily designed to protect bondholders

A highly illiquid bond that pays no interest but might entitle its holder to rental income from an asset is most apt to be a:

sukuk

The bond market requires a return of 6.2 percent on the 15-year bonds issued by Mingwei Manufacturing. The 6.2 percent is referred to as the:

yield to maturity

Which one of the following is the price at which a dealer will sell a bond?

Asked price

Chavez & Hwang just issued 15-year, 6.4 percent, unsecured bonds at par. These bonds fit the definition of which one of the following terms?

Debenture

A $1,000 par value corporate bond that pays $45 annually in interest was issued last year. Which one of these would apply to this bond today if the current price of the bond is $989.42?

The current yield exceeds the coupon rate.

A bond that has only one payment, which occurs at maturity, defines which one of these types of bonds?

Zero coupon

A bond that is payable to whomever has physical possession of the bond is said to be in:

bearer form

A call-protected bond is a bond that:

cannot be called during a given period of time

Ana just received the semiannual payment of $35 on a bond she owns. This is called the ______ payment

coupon

Today, Hannah paid a total of $1,176, including accrued interest, to purchase a 20-year bond that has 6 years left until maturity. This price is referred to as the:

dirty price

Dilan owns a bond that will pay him $45 each year in interest plus $1,000 as a principal payment at maturity. The $1,000 is referred to as the:

face value

A "fallen angel" is a bond that has moved from:

investment grade to speculative grade

A bond's principal is repaid on the ________ date.

maturity