Ch 6.6 Bonds and Other Financial Assets Quiz

What is the coupon rate?

• The interest rate that a bond issuer will pay to a bondholder.

• The time at which payment to a bondholder is due.

• The amount to be paid to the bondholder at maturity.

• The annual rate of return on a bond if the bond is held to maturity.

What is maturity?

• The interest rate that a bond issuer will pay to a bondholder.

• The time at which payment to a bondholder is due.

• The amount to be paid to the bondholder at maturity.

• The annual rate of return on a bond if the bond is held to maturity.

What is par value?

• The interest rate that a bond issuer will pay to a bondholder.

• The time at which payment to a bondholder is due.

• The amount to be paid to the bondholder at maturity.

• The annual rate of return on a bond if the bond is held to maturity.

What is yield?

• The interest rate that a bond issuer will pay to a bondholder.

• The time at which payment to a bondholder is due.

• The amount to be paid to the bondholder at maturity.

• The annual rate of return on a bond if the bond is held to maturity.

What are savings bonds?

• Low-denomination bonds issued by the US government.

• Bonds issued by the government to protect against inflation.

• State and local government bonds issued to finance projects.

• Bonds issued by corporations to raise money.

What are inflation-indexed bonds?

• Low-denomination bonds issued by the US government.

• Bonds issued by the government to protect against inflation.

• State and local government bonds issued to finance projects.

• Bonds issued by corporations to raise money.

What are municipal bonds?

• Low-denomination bonds issued by the US government.

• Bonds issued by the government to protect against inflation.

• State and local government bonds issued to finance projects.

• Bonds issued by corporations to raise money.

What are corporate bonds?

• Low-denomination bonds issued by the US government.

• Bonds issued by the government to protect against inflation.

• State and local government bonds issued to finance projects.

• Bonds issued by corporations to raise money.

What are junk bonds?

• Bonds with a fairly high risk of default, but a potentially high yield of return.

• Bonds issued by the government to protect against inflation.

• State and local government bonds issued to finance projects.

• Bonds issued by corporations to raise money.

What are capital markets?

• Markets in which money is lent for periods longer than a year.

• Markets in which money is lent for periods of a year or less.

• Financial assets that can be redeemed only by the original holder.

• Financial assets that can be resold are sold on this market.