Unit 13

Current Market rates are 6%. A bond with a 8% coupon would be most likely to have a net present value of zero when the bonds internal rate of return is...

6%. The internal rate of return of a bond is the interest rate that makes the NPV of the investment equal to zero.

Issued in the US by domestic banks and represent receipts for securities traded on Foreign exchanges.

ADRs

How are Treasury securities issued?

Book entry form. T-bills are always issued at a discount.

What security is guaranteed by the full faith and credit of the US Government?

GNMA

What are Eurobonds and Eurodollar bonds paid?

Eurodollar bonds pay in US dollars. Eurobonds pay in foreign currency

What are Eurodollars?

Eurodollars are US dollars deposited in banks outside the United States.

Who can issue Eurodollar Bonds?

Foreign corporations, foreign governments, domestic corporations, and domestic governments.

How is a NY resident that purchases NY OG Bond taxed?

It is not subject to Federal Income Tax. While muni bond interest is usually taxed at the state level, most states have an internal rule that exempt interest on. Their state and local level.

One would look at the average maturities when doing a cash flow analysis for...

Mortgage-backed pass though securities pass though interest and principal to their investors.

DERP corp 5% convertible debentures maturing in 2030 are current selling at 120. The conversion price is $40. One would expect the common stock to be selling at (below or above)

Somewhat below $48 shares. Because convertible securities generally sell at a sight premium over their parity price, the stock should have a current market value a bit let less than $48 a share.

When investing in a foreign bond market, a customer will profit if...

The US Dollar weakens and foreign currency strengths

What does the YTC computation factor?

The amount of interest payment, length of time of the call, the current price, and call price

What are some characteristics of commercial paper?

Unsecured debt obligations of corporations needing short-term financing. Maturities of no more than 270 days, it is exempt from registration

Who does not issue Eurodollar bonds?

Us government

When a corporation domiciled in the UK issues US dollar-dominated bonds in the US, it is issuing...

Yankee bonds. They are foreign bonds, denominated in US dollars and issued in the US by foreign banks and corporations.