Chapterh07h-hInteresthRateshandhBondhValuation
Chapter 07 h
Interest Rates and Bond Valuation
h h h h
hh
MultiplehChoicehQuestions
h
1.hMaryhjusthpurchasedhahbondhwhichhpaysh$60hahyearhinhinterest.hWhathishthish$60hcalled?h
A.hcoupon
B.hfacehvalue
C.hdiscount
D.hcallhpremium
E.hyield
h
2.hBerthownshahbondhthathwillhpayhhimh$75heachhyearhinhinteresthplushah$1,000hprincipalhpaymenth
athmaturity.hWhathishtheh$1,000hcalled?h
A.hcoupon
B.hfacehvalue
C.hdiscount
D.hyield
E.hdirtyhprice
h
3.hAhbond'shcouponhratehishequalhtohthehannualhinteresthdividedhbyhwhichhonehofhthehfollowing?h
A.hcallhprice
B.hcurrenthprice
C.hfacehvalue
D.hcleanhprice
E.hdirtyhprice
h
4.hThehspecifiedhdatehonhwhichhthehprincipalhamounthofhahbondhishpayablehishreferredhtohashwhichh
onehofhthehfollowing?h
A.hcouponhdate
B.hyieldhdate
C.hmaturity
D.hdirtyhdate
E.hcleanhdate
h
7-1
,Chapterh07h-hInteresthRateshandhBondhValuation
5.hCurrently,hthehbondhmarkethrequireshahreturnhofh11.6hpercenthonhtheh10-
yearhbondshissuedhbyhWinstonhIndustries.hTheh11.6hpercenthishreferredhtohashwhichhonehofhthehfoll
owing?h
A.hcouponhrate
B.hfacehrate
C.hcallhrate
D.hyieldhtohmaturity
E.hinteresthrate
h
6.hThehcurrenthyieldhishdefinedhashthehannualhinteresthonhahbondhdividedhbyhwhichhonehofhthehfollo
wing?h
A.hcoupon
B.hfacehvalue
C.hmarkethprice
D.hcallhprice
E.hdirtyhprice
h
7.hAnhindenturehis:h
A.hanotherhnamehforhahbond'shcoupon.
B.hthehwrittenhrecordhofhallhthehholdershofhahbondhissue.
C.hahbondhthathishpasthitshmaturityhdatehbuthhashyethtohbehrepaid.
D.hahbondhthathishsecuredhbyhthehinventoryhheldhbyhthehbond'shissuer.
E.hthehlegalhagreementhbetweenhthehbondhissuerhandhthehbondholders.
h
8.hAtlashEntertainmenthhash15-
yearhbondshoutstanding.hThehinteresthpaymentshonhthesehbondsharehsenthdirectlyhtoheachhofhthehin
dividualhbondholders.hThesehdirecthpaymentsharehahclearhindicationhthaththehbondshcanhaccuratel
yhbehdefinedhashbeinghissued:h
A.hathpar.
B.hinhregisteredhform.
C.hinhstreethform.
D.hashdebentures.
E.hashcallable.
h
7-2
,Chapterh07h-hInteresthRateshandhBondhValuation
9.hAhbondhthathishpayablehtohwhomeverhhashphysicalhpossessionhofhthehbondhishsaidhtohbehin:h
A.hnew-issuehcondition.
B.hregisteredhform.
C.hbearerhform.
D.hdebenturehstatus.
E.hcollateralhstatus.
h
10.hThehLeewardhCompanyhjusthissuedh15-
year,h8hpercent,hunsecuredhbondshathpar.hThesehbondshfiththehdefinitionhofhwhichhonehofhthehfollo
winghterms?h
A.hnote
B.hdiscounted
C.hzero-coupon
D.hcallable
E.hdebenture
h
11.hWhichhofhthehfollowinghdefineshahnote?
I.hsecured
II.hunsecured
III.hmaturityhlesshthanh10hyears
IV.hmaturityhinhexcesshofh10hyearsh
A.hIIIhonly
B.hIhandhIIIhonly
C.hIhandhIVhonly
D.hIIhandhIIIhonly
E.hIIhandhIVhonly
h
12.hAhsinkinghfundhishmanagedhbyhahtrusteehforhwhichhonehofhthehfollowinghpurposes?h
A.hpayinghinteresthpayments
B.hearlyhbondhredemption
C.hconvertinghbondshintohequityhsecurities
D.hpayinghpreferredhdividends
E.hreducinghcouponhrates
h
7-3
, Chapterh07h-hInteresthRateshandhBondhValuation
13.hAhbondhthathcanhbehpaidhoffhearlyhaththehissuer'shdiscretionhishreferredhtohashbeinghwhichhoneho
fhthehfollowing?h
A.hzerohcoupon
B.hcallable
C.hsenior
D.hcollateralized
E.hunsecured
h
14.hAh$1,000hfacehvaluehbondhcanhbehredeemedhearlyhaththehissuer'shdiscretionhforh$1,030,hplusha
nyhaccruedhinterest.hThehadditionalh$30hishcalledhwhichhonehofhthehfollowing?h
A.hdirtyhprice
B.hredemptionhvalue
C.hcallhpremium
D.horiginal-issuehdiscount
E.hredemptionhdiscount
h
15.hAhdeferredhcallhprovisionhishwhichhonehofhthehfollowing?h
A.hrequiremenththathahbondhissuerhpayhthehcurrenthmarkethprice,hplushaccruedhinterest,hshouldhtheh
firmhdecidehtohcallhahbond
B.habilityhofhahbondhissuerhtohdelayhrepayinghahbondhuntilhafterhthehmaturityhdatehshouldhthehissue
rhsohopt
C.hprohibitionhplacedhonhanhissuerhwhichhpreventshthathissuerhfromheverhredeeminghbondshpriorht
ohmaturity
D.hprohibitionhwhichhpreventshbondhissuershfromhredeeminghcallablehbondshpriorhtohahspecifiedh
date
E.hrequiremenththathahbondhissuerhpayhahcallhpremiumhwhichhishequalhtohorhgreaterhthanhonehyear's
hcouponhshouldhthathissuerhdecidehtohcallhahbond
h
16.hAhcall-protectedhbondhishahbondhthat:h
A.hishguaranteedhtohbehcalled.
B.hcanhneverhbehcalled.
C.hishcurrentlyhbeinghcalled.
D.hishcallablehathanyhtime.
E.hcannothbehcalledhduringhahcertainhperiodhofhtime.
h
7-4
Chapter 07 h
Interest Rates and Bond Valuation
h h h h
hh
MultiplehChoicehQuestions
h
1.hMaryhjusthpurchasedhahbondhwhichhpaysh$60hahyearhinhinterest.hWhathishthish$60hcalled?h
A.hcoupon
B.hfacehvalue
C.hdiscount
D.hcallhpremium
E.hyield
h
2.hBerthownshahbondhthathwillhpayhhimh$75heachhyearhinhinteresthplushah$1,000hprincipalhpaymenth
athmaturity.hWhathishtheh$1,000hcalled?h
A.hcoupon
B.hfacehvalue
C.hdiscount
D.hyield
E.hdirtyhprice
h
3.hAhbond'shcouponhratehishequalhtohthehannualhinteresthdividedhbyhwhichhonehofhthehfollowing?h
A.hcallhprice
B.hcurrenthprice
C.hfacehvalue
D.hcleanhprice
E.hdirtyhprice
h
4.hThehspecifiedhdatehonhwhichhthehprincipalhamounthofhahbondhishpayablehishreferredhtohashwhichh
onehofhthehfollowing?h
A.hcouponhdate
B.hyieldhdate
C.hmaturity
D.hdirtyhdate
E.hcleanhdate
h
7-1
,Chapterh07h-hInteresthRateshandhBondhValuation
5.hCurrently,hthehbondhmarkethrequireshahreturnhofh11.6hpercenthonhtheh10-
yearhbondshissuedhbyhWinstonhIndustries.hTheh11.6hpercenthishreferredhtohashwhichhonehofhthehfoll
owing?h
A.hcouponhrate
B.hfacehrate
C.hcallhrate
D.hyieldhtohmaturity
E.hinteresthrate
h
6.hThehcurrenthyieldhishdefinedhashthehannualhinteresthonhahbondhdividedhbyhwhichhonehofhthehfollo
wing?h
A.hcoupon
B.hfacehvalue
C.hmarkethprice
D.hcallhprice
E.hdirtyhprice
h
7.hAnhindenturehis:h
A.hanotherhnamehforhahbond'shcoupon.
B.hthehwrittenhrecordhofhallhthehholdershofhahbondhissue.
C.hahbondhthathishpasthitshmaturityhdatehbuthhashyethtohbehrepaid.
D.hahbondhthathishsecuredhbyhthehinventoryhheldhbyhthehbond'shissuer.
E.hthehlegalhagreementhbetweenhthehbondhissuerhandhthehbondholders.
h
8.hAtlashEntertainmenthhash15-
yearhbondshoutstanding.hThehinteresthpaymentshonhthesehbondsharehsenthdirectlyhtoheachhofhthehin
dividualhbondholders.hThesehdirecthpaymentsharehahclearhindicationhthaththehbondshcanhaccuratel
yhbehdefinedhashbeinghissued:h
A.hathpar.
B.hinhregisteredhform.
C.hinhstreethform.
D.hashdebentures.
E.hashcallable.
h
7-2
,Chapterh07h-hInteresthRateshandhBondhValuation
9.hAhbondhthathishpayablehtohwhomeverhhashphysicalhpossessionhofhthehbondhishsaidhtohbehin:h
A.hnew-issuehcondition.
B.hregisteredhform.
C.hbearerhform.
D.hdebenturehstatus.
E.hcollateralhstatus.
h
10.hThehLeewardhCompanyhjusthissuedh15-
year,h8hpercent,hunsecuredhbondshathpar.hThesehbondshfiththehdefinitionhofhwhichhonehofhthehfollo
winghterms?h
A.hnote
B.hdiscounted
C.hzero-coupon
D.hcallable
E.hdebenture
h
11.hWhichhofhthehfollowinghdefineshahnote?
I.hsecured
II.hunsecured
III.hmaturityhlesshthanh10hyears
IV.hmaturityhinhexcesshofh10hyearsh
A.hIIIhonly
B.hIhandhIIIhonly
C.hIhandhIVhonly
D.hIIhandhIIIhonly
E.hIIhandhIVhonly
h
12.hAhsinkinghfundhishmanagedhbyhahtrusteehforhwhichhonehofhthehfollowinghpurposes?h
A.hpayinghinteresthpayments
B.hearlyhbondhredemption
C.hconvertinghbondshintohequityhsecurities
D.hpayinghpreferredhdividends
E.hreducinghcouponhrates
h
7-3
, Chapterh07h-hInteresthRateshandhBondhValuation
13.hAhbondhthathcanhbehpaidhoffhearlyhaththehissuer'shdiscretionhishreferredhtohashbeinghwhichhoneho
fhthehfollowing?h
A.hzerohcoupon
B.hcallable
C.hsenior
D.hcollateralized
E.hunsecured
h
14.hAh$1,000hfacehvaluehbondhcanhbehredeemedhearlyhaththehissuer'shdiscretionhforh$1,030,hplusha
nyhaccruedhinterest.hThehadditionalh$30hishcalledhwhichhonehofhthehfollowing?h
A.hdirtyhprice
B.hredemptionhvalue
C.hcallhpremium
D.horiginal-issuehdiscount
E.hredemptionhdiscount
h
15.hAhdeferredhcallhprovisionhishwhichhonehofhthehfollowing?h
A.hrequiremenththathahbondhissuerhpayhthehcurrenthmarkethprice,hplushaccruedhinterest,hshouldhtheh
firmhdecidehtohcallhahbond
B.habilityhofhahbondhissuerhtohdelayhrepayinghahbondhuntilhafterhthehmaturityhdatehshouldhthehissue
rhsohopt
C.hprohibitionhplacedhonhanhissuerhwhichhpreventshthathissuerhfromheverhredeeminghbondshpriorht
ohmaturity
D.hprohibitionhwhichhpreventshbondhissuershfromhredeeminghcallablehbondshpriorhtohahspecifiedh
date
E.hrequiremenththathahbondhissuerhpayhahcallhpremiumhwhichhishequalhtohorhgreaterhthanhonehyear's
hcouponhshouldhthathissuerhdecidehtohcallhahbond
h
16.hAhcall-protectedhbondhishahbondhthat:h
A.hishguaranteedhtohbehcalled.
B.hcanhneverhbehcalled.
C.hishcurrentlyhbeinghcalled.
D.hishcallablehathanyhtime.
E.hcannothbehcalledhduringhahcertainhperiodhofhtime.
h
7-4
