Bond Basics

What is the face value of a bond?

• The face value of a bond is the market price of the bond.

• The face value of a bond is the amount that the issuer promises to pay the bondholder at maturity.

• The face value of a bond is the interest rate paid to the bondholder.

• The face value of a bond is the total return on investment for the bondholder.

What is the coupon rate of a bond?

• The coupon rate of a bond is the maturity date of the bond.

• The coupon rate of a bond is the price at which the bond was issued.

• The coupon rate of a bond is the fixed interest rate that the issuer pays to the bondholders.

• The coupon rate of a bond is the total return on investment.

What are zero coupon bonds?

• Zero coupon bonds are fixed-income securities that do not pay interest but are issued at a discount to their face value, which is paid at maturity.

• Zero coupon bonds pay interest annually

• Zero coupon bonds are always issued at face value

• Zero coupon bonds are high-risk investments

What are corporate bonds?

• Corporate bonds are physical certificates issued by corporations.

• Corporate bonds are government-issued securities.

• Corporate bonds are shares issued by corporations to raise capital.

• Corporate bonds are debt securities issued by corporations to raise capital.

What are munciplity bonds?

• Municipal bonds are only available for purchase by foreign investors

• Municipal bonds are stocks issued by private companies

• Municipal bonds are debt securities issued by a state, municipality, or county to finance its capital expenditures.

• Municipal bonds are used to finance personal expenses

Who are bondholders?

• People who invest in real estate

• Individuals or entities that own bonds issued by governments or corporations

• Individuals who own stocks

• Entities that issue bonds

Who are bondissuers?

• Individuals

• Governments or corporations

• Non-profit organizations

• Universities

What is the difference between face value and market value of a bond?

• Face value is the value of the bond at maturity, while market value is the current price at which the bond can be bought or sold in the market.

• Face value is the value of the bond at maturity, while market value is the interest rate of the bond.

• Face value is the value of the bond at maturity, while market value is the total return on investment.

• Face value is the value of the bond at issuance, while market value is the value of the bond at maturity.

What are the risks associated with investing in bonds?

• Interest rate risk, credit risk, inflation risk, call risk, and liquidity risk.

• Political risk, systematic risk, operational risk

• Reinvestment risk, regulatory risk, counterparty risk

• Market risk, default risk, exchange rate risk