Financial Ch. 7 Homework

What is a real rate of return?

-a rate of return that has been adjusted for inflation

A corporate bond's yield to maturity (YTM) _________.

-changes over time -can be greater than, equal to, or less than the bond's coupon rate

Which of the following are true about a bond's face value?

-it is also known as the par value -it is the principal amount repaid at the maturity

A market is considered transparent if _________.

-its prices and trading volume are easily observed

All junk-bonds typically have which of these features?

-less than investment-grade rating -high probability of default

Which of the following institutions issue bonds that are traded in the bond market?

-public corporations -state governments -the federal government

Which of the following terms apply to a bond?

-time to maturity -par value -coupon rate

In general, a corporate bond's coupon rate ________,

is fixed until the bond matures

What is the definition of a bond's time to maturity?

the number of years until the face value is due to be repaid