Bond Characteristics and Learning Goals Quiz

What is a discount bond?

• A bond that sells for a price greater than par.

• A bond that sells for a price lower than par.

• A bond with a fixed interest rate.

• A bond with a short term.

What does the term of the loan influence in bond issuance?

• The bond's color.

• The coupon rate.

• The bond's issuer.

• The bond's currency.

What is the CHG value for the Treasury Security in the example?

• 0.0060

• 0.221

• 1.70

• 3.26

What does the prevailing market rate depend on?

• Bondholder's income

• Bond’s term to maturity

• Bond’s issuer

• Bond’s color

What is the primary purpose of discounting future cash flows in bond valuation?

• To increase the bond's value

• To adjust for inflation

• To determine the bond's current price

• To calculate interest payments

What is the effect of a higher prevailing market interest rate on bond prices?

• Increases bond prices

• Decreases bond prices

• Has no effect on bond prices

• Stabilizes bond prices

What is the par value of the bond mentioned in the document?

• $500

• $1,000

• $1,500

• $2,000

What is the yield percentage for the bond maturing in 20 years?

• 4%

• 5%

• 6%

• 7%

How many years until the bond matures?

• 10 years

• 15 years

• 20 years

• 25 years

What is the main characteristic of a zero coupon bond?

• It pays interest monthly

• It pays interest annually

• It does not pay interest until maturity

• It pays interest semi-annually