A 10-year Treasury note as a face value of $1,000, price of $1,200, and a 7.5% coupon rate. Based on this information, we know the:

coupon payment on this bond is equal to $75.

present value is greater than its price.

current yield is equal to 8.33%.

coupon payment on this bond is equal to $90.

When a loan is amortized, it means the:

principal and interest are paid off by the borrower over the life of the loan.

interest is due entirely at the maturity date.

principal in never repaid, only interest.

The price of a coupon bond can best be described as the:

present value of the face value plus the present value of the coupon payments.

present value of the face value.

future value of the coupon payments.

future value of the coupon payments and the face value.

The difference in the prices of a zero-coupon bond and a coupon bond with the same face value and maturity date is simply:

the present value of the coupon payments.

the present value of the final payment.

the future value of the coupon payments.

Which of the following statements is most accurate?

Yield to maturity is the same as the coupon rate if the bond is purchased for face value and held to maturity.

Yield to maturity is equal to the coupon rate if the bond is held to maturity.

Yield to maturity is the same as the coupon rate.

Yield to maturity will exceed the coupon rate if the bond is purchased for face value.

When the price of a bond equals the face value the:

current yield is equal to the coupon rate.

yield to maturity will be above the coupon rate.

yield to maturity will be below the coupon rate.

yield to maturity is greater than the current yield.

If the purchase price of a bond exceeds the face value, the yield to maturity:

will be less than the coupon rate because the capital gain will be negative.

is greater than the coupon rate because the capital gain is positive.

will be greater than the current yield.

capital gain is positive.

will be greater than the current yield.

will be less than the coupon rate because the capital gain will be negative.

The current yield of a bond:

equals zero for a zero-coupon bond since these bonds have no coupon payments.

is another term for the coupon rate.

is another term for the yield to maturity.

is the difference between its future value and its present value.

A $1,000 face value bond purchased for $965.00, with an annual coupon of $60, and 20 years to maturity has a:

yield to maturity and current yield equal to 6.00%.

A $1,000 face value bond purchased for $965.00, with an annual coupon of $60, and 20 years to maturity has a:

current yield equal to 6.22% and a coupon rate below this.

current yield and coupon rate equal to 6.22% and a coupon rate above this.

coupon rate equal to 6.00% and a current yield below this.

yield to maturity and current yield equal to 6.00%.

In calculating the current yield for a bond the:

present value of the capital gain/loss is ignored.

present value of the final payment is the only important consideration.

present value of the coupon payments is the only important consideration.

In calculating the current yield for a bond the:

coupon payment and purchase price is all that is needed.

present value of the capital gain/loss is ignored.

present value of the final payment is the only important consideration.

present value of the coupon payments is the only important consideration.

When the current yield and the coupon rate are equal, the bond is:

purchased at a price that equals the face value.

purchased at a price that exceeds its face value.

If a bond's purchase price equals the face value the:

coupon rate equals the yield to maturity, which equals the current yield.

coupon rate equals the current yield, which is less than the yield to maturity.

current yield equals the yield to maturity, which exceeds the coupon rate.

coupon rate does not equal the current yield, which does not equal the yield to maturity.

Which of the following is not a reason why the yield to maturity can differ from the current yield?

Because the current yield moves in the opposite direction from price.

Because the yield to maturity considers the capital gain/loss.

Because the current yield focuses only on the coupon payment and the purchase price.

Because most bonds are not purchased for face value.

A $1,000 face value bond, with one year to maturity that sells for $950 and has a $40 annual coupon has a:

current yield and yield to maturity of 4.00%.

yield to maturity that equals the current yield.

coupon rate of 4.00% and a current yield that is below this.

A $1,000 face value bond, with an annual coupon of $40, one year to maturity and a purchase price of $980 has a:

current yield that equals 4.08% and a yield to maturity that equals 6.12%.

current yield that equals 4.00%.

A current yield that equals 4.08% and a yield to maturity that equals 4.0%.

The bid price for a bond quote is:

the price at which the bond dealer is willing to purchase the bond.

the price at which the bond dealer is willing to sell the bond.

determined solely by the time left to maturity.

In reading bond quotes:

the asked price is usually above the bid price.

the bid price is usually above the asked price.

the asked price is fixed over the life of the bond.

bid and asked prices must be equal as set forth by SEC regulations.

The bond dealer's spread is:

the asking price less the bid price.

the difference between the current yield and the yield to maturity.

the bid price less the asking price.

usually negative; the dealer makes a profit holding the bonds.

The larger the bond dealer's spread the:

less liquid is the market for that bond.

greater is the coupon rate for that bond.

more liquid is the market for that bond.

less risk there is for the dealer to hold that bond.

The holding period return on a bond:

will be less than the yield to maturity if the bond is sold for less than face value.

can never be more than the yield to maturity.

will equal the yield to maturity if the bond is purchased for face value and sold at a lower price.

will be less than the yield to maturity if the bond is sold for more than face value.

One characteristic that distinguishes holding period return from the coupon rate, the current yield, and the yield to maturity is:

all of the other returns can be calculated at the time the bond is purchased, but holding period return cannot.

holding period return will always be the highest return.

holding period return will usually be less than the other returns.

only the holding period return includes the capital gain/loss.

Which of the following best expresses the equation for holding period return?

Yield to maturity - current yield

In considering the holding period return, the longer the term of the bond the:

more important is the capital gain.

less important is the capital gain and the more important in the current yield.

less important is the coupon rate and the more important is the current yield.

less important is the capital gain.

The holding period return has relevance because:

most bonds are held by the original purchaser until maturity.

most bonds are held by the original purchaser until they mature.

current yields are not that important to bondholders.

Suppose there is a decrease in the price at which a bondholder sells her bond. In this case, the holding period return will:

decrease, since this lowers the capital gain.

increase, since yields and prices are inversely related.

If a one-year zero-coupon bond has a face value of $100, is purchased for $94, and is held to maturity the:

yield to maturity will be 6.38%.

holding period return will exceed the yield to maturity.

yield to maturity will exceed the holding period return.

Bond prices and yields:

move together in the same direction.

do not change if the coupon is fixed.

As bond prices increase:

the quantity of bonds supplied increases.

the quantity of bonds supplied decreases.

the quantity of bonds demanded increases.

BOND 2

Authored by 11 Anh Phạm Hà Quyên

Specialty

12th Grade

Used 2+ times

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

A zero-coupon bond refers to a bond which:

does not pay any coupon payments because the issuer is in default.

promises a single future payment.

pays coupons only once a year.

pays coupons only if the bond price is above face value.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

A consol is:

another name for a zero-coupon bond.

a bond with a maturity date exceeding 10 years.

a bond that makes periodic interest payments forever.

a form of a bond that is issued quite often by the U.S. Treasury.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

A pure discount bond is also known as a:

consol.

fixed payment loan.

coupon bond.

zero-coupon bond.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The most common form of zero-coupon bonds found in the United States is:

AAA rated corporate bonds.

U.S. Treasury bills.

30-year U.S. Treasury bonds.

municipal bonds.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following best expresses the formula for determining the price of a U.S. Treasury bill that matures n periods from now per $100 of face value when the interest rate is i?

$100/(1 + i)^n

$100(1 + i)

$100/(1 + i)

1 + $100/(1 + i)^n

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Once you buy a coupon bond, which of the following can change?

Coupon rate

Coupon payment

Face value

Yield to maturity

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following makes fixed payments indefinitely?

Amortized loan

Consol

Coupon bond

Zero-coupon bond

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BOND 2

A zero-coupon bond refers to a bond which:

A consol is:

A pure discount bond is also known as a:

The most common form of zero-coupon bonds found in the United States is:

Which of the following best expresses the formula for determining the price of a U.S. Treasury bill that matures n periods from now per $100 of face value when the interest rate is i?

Once you buy a coupon bond, which of the following can change?

Which of the following makes fixed payments indefinitely?

A 10-year Treasury note as a face value of $1,000, price of $1,200, and a 7.5% coupon rate. Based on this information, we know the:

If the annual interest rate is 5% (.05), the price of a one-year Treasury bill per $100 of face value would be:

If the annual interest rate is 5% (.05), the price of a six-month Treasury bill would be:

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