CH 7

Allison just received her semiannual payment of $35 on a bond she owns. Which term refers to this payment? A. Coupon. B. Face value. C. Discount D. Call premium. E. Yield.

A. Coupon

A bond that is payable to whomever has physical possession of the bond is said to be in: A. New-issue condition. B. Registered form. C. Bearer form. D. Debenture status. E. Collateral status.

C. Bearer form.

A $1,000 face value bond can be redeemed early at the issuer's discretion for $1,030, plus any accrued interest. The additional $30 is called the: A. Dirty price. B. Redemption value. C. Call premium. D. Original-issue discount. E. Redemption discount.

C. Call premium.

A bond's coupon rate is equal to the annual interest divided by which one of the following? A. Call price. B. Current price. C. Face value. D. Clean price. E. Dirty price.

C. Face Value

Which one of these is most apt to be included in a bond's indenture one year after the bond has been issued? A. Current yield. B. Written record of all the current bond holders. . C. List of collateral used as bond security. D. Current market price. E. Price at which a bondholder can resell the bond to another bondholder

C. List of collateral used as bond security.

The current yield is defined as the annual interest on a bond divided by which one of the following? A. Coupon rate. B. Face value. C. Market price. D. Call price. E. Par value.

C. Market Price

The bond principal is repaid on which one of these dates? A. Coupon date. B. Yield date. C. Maturity date. D. Dirty date. E. Clean date.

C. Maturity Date

Jason's Paints just issued 20-year, 7.25 percent, unsecured bonds at par. These bonds fit the definition of which one of the following terms? A. Note. B. Discounted. C. Zero-coupon. D. Callable. E. Debenture.

E. Debenture.

The items included in an indenture that limit certain actions of the issuer in order to protect a bondholder's interests are referred to as the: A. Trustee relationships. B. Bylaws. C. Legal bounds. D. Trust deed. E. Protective covenants.

E. Protective covenants.

A bond that can be paid off early at the issuer's discretion is referred to as being which type of bond? A. Par value. B. Callable. C. Senior. D. Subordinated. E. Unsecured.

B. Callable.

A sinking fund is managed by a trustee for which one of the following purposes? A. Paying bond interest payments. B. Early bond redemption. C. Converting bonds into equity securities. D. Paying preferred dividends. E. Reducing bond coupon rates.

B. Early Bond Redemption

Bert owns a bond that will pay him $75 each year in interest plus a $1,000 principal payment at maturity. What is the $1,000 called? A. Coupon. B. Face value. C. Discount. D. Yield. E. Dirty price.

B. Face Value

Road Hazards has 12-year bonds outstanding. The interest payments on these bonds are sent directly to each of the individual bondholders. These direct payments are a clear indication that the bonds can accurately be defined as being issued: A. At par. B. In registered form. C. In street form. D. As debentures. E. As callable bonds.

B. In registered form.

A note is generally defined as: A. A secured bond with an initial maturity of 10 years or more. B. A secured bond that initially matures in less than 10 years. C. Any bond secured by a blanket mortgage. D. An unsecured bond with an initial maturity of 10 years or less. E. Any bond maturing in 10 years or more.

D. An unsecured bond with an initial maturity of 10 years or less.

A deferred call provision is which one of the following? A. Requirement that a bond issuer pay the current market price, plus accrued interest, should the firm decide to call a bond. B. Ability of a bond issuer to delay repaying a bond until after the maturity date should the issuer so opt. C. Prohibition placed on an issuer which prevents that issuer from ever redeeming bonds prior to maturity. D. Prohibition which prevents bond issuers from redeeming callable bonds prior to a specified date. E. Requirement that a bond issuer pay a call premium that is equal to or greater than one year's coupon should that issuer decide to call a bond.

D. Prohibition which prevents bond issuers from redeeming callable bonds prior to a specified date.

The bond market requires a return of 9.8 percent on the five-year bonds issued by JW Industries. The 9.8 percent is referred to as which one of the following? A. Coupon rate. B. Face rate. C. Call rate. D. Yield to maturity. E. Current yield.

D. Yield to maturity

A call-protected bond is a bond that: A. Is guaranteed to be called. B. Can never be called. C. Is currently being called. D. Is callable at any time. E. Cannot be called at this point in time.

E. Cannot be called at this point in time.