Chapter 1 Introduction to Bond

The amount of money that must be paid by the bond issuer to the bond holder at maturity, is the meaning of ___

• Maturity

• Principle

• Yield

• Coupon

What is Zero-coupon bond?

• Option to purchase a numbers of share

• Backed by assets

• Tend to carry high interest rates.

• A bond that pays no coupons. It only pays the face value on the maturity date.

Issued by an international borrower and sold to the investors in countries with currencies other than the currency in which the bond is denominated

• Junk Bonds

• Eurobonds

• Yankee Bond

• Municipal Bond

Bondholder will interfere in management matters

• False

• True

BBB rating meaning?

• High safety for payment

• Has moderate safety for payment

• Currently in default

• Has superior safety for payment

Functions of Credit Rating Agencies

• Business Analysis

• Evaluation of industrial risk

• Market position of the company within the industry

• All the above

Bid Price is?

• Someone willing to pay for the bond

• Fixed interest rate that the issuer pays to the lender

• The borrower will repay the investors their principal

Investing in bond, the investors have voting rights

• True

• False

For corporate bonds, who will act as arranger for the companies?

• Credit Rating Agencies

• BNM

• Banks

• Government

Why do companies and governments establish sinking funds for their bonds?

• Risk Reduction

• Investors attraction

• Interest cost saving

• All the above