TEST BANK For Fundamentals of Corporate Finance, 5th
Edition by Robert Parrino, David Kidwell, Verified Chapters 1 -
21, Complete Newest Version
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 - ANSWER: A. Coupon
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. Call Premium
E. Yield - ANSWER: B. Face Value
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 - ANSWER: C. Face Value
The bond principal is repaid on which of these dates?
A. Coupon Date
B. Yield Date?
C. Maturity Date
D. Dirty Date
E. Clean Date - ANSWER: C. Maturity 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 - ANSWER: D. Yield to Maturity
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 - ANSWER: C. Market Price
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 - ANSWER: C. List of collateral used as bond security
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. At debentures - ANSWER: B. In Registered Form
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 - ANSWER: C. Bearer Form
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. Debenture - ANSWER: D. Debenture
A note is generally defined as:
A. A secured bong 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 - ANSWER: D. An
unsecured bond with an initial maturity of 10 years or less
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 - ANSWER: B. Early bond redemption
A bond 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. Unsecured - ANSWER: B. Callable
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 - ANSWER: C. Call Premium
A deferred call provision is which one of the following?
A. Requirement that a bond issuer pay the current market price, plus accused
interest, should the firm decide to call the bond
B. Ability pf 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 - ANSWER: D. Prohibition which prevents bond issuers from
redeeming callable bonds prior to a specified date
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. Cannot be called at this point in time - ANSWER: D. Cannot be called at this point
in time
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. Protective Covenants - ANSWER: D. Protective Covenants
A bond that has only one payment, which occurs at maturity, defines which one of
these types of bonds?
A. Debenture
B. Callable
C. Floating-Rate
D. Zero Coupon - ANSWER: D. Zero Coupon
Edition by Robert Parrino, David Kidwell, Verified Chapters 1 -
21, Complete Newest Version
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 - ANSWER: A. Coupon
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. Call Premium
E. Yield - ANSWER: B. Face Value
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 - ANSWER: C. Face Value
The bond principal is repaid on which of these dates?
A. Coupon Date
B. Yield Date?
C. Maturity Date
D. Dirty Date
E. Clean Date - ANSWER: C. Maturity 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 - ANSWER: D. Yield to Maturity
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 - ANSWER: C. Market Price
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 - ANSWER: C. List of collateral used as bond security
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. At debentures - ANSWER: B. In Registered Form
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 - ANSWER: C. Bearer Form
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. Debenture - ANSWER: D. Debenture
A note is generally defined as:
A. A secured bong 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 - ANSWER: D. An
unsecured bond with an initial maturity of 10 years or less
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 - ANSWER: B. Early bond redemption
A bond 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. Unsecured - ANSWER: B. Callable
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 - ANSWER: C. Call Premium
A deferred call provision is which one of the following?
A. Requirement that a bond issuer pay the current market price, plus accused
interest, should the firm decide to call the bond
B. Ability pf 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 - ANSWER: D. Prohibition which prevents bond issuers from
redeeming callable bonds prior to a specified date
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. Cannot be called at this point in time - ANSWER: D. Cannot be called at this point
in time
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. Protective Covenants - ANSWER: D. Protective Covenants
A bond that has only one payment, which occurs at maturity, defines which one of
these types of bonds?
A. Debenture
B. Callable
C. Floating-Rate
D. Zero Coupon - ANSWER: D. Zero Coupon
