Chapter 7 Multiple choice questions

Mary just purchased a bond which pays $60 a year in interest. What is this $60 called?

• coupon

• face value

• discount

• call premium

• yield

Bert owns a bond that will pay him $75 each year in interest plus a $1,000 principal payment at maturity. What is the $1,000 called?

• coupon

• face value

• discount

• yield

• dirty price

A bond's coupon rate is equal to the annual interest divided by which one of the following?

• call price

• current price

• face value

• clean price

• dirty price

The specified date on which the principal amount of a bond is payable is referred to as which one of the following?

• coupon date

• yield date

• maturity

• dirty date

• clean date

Currently, the bond market requires a return of 11.6 percent on the 10-year bonds issued by Winston Industries. The 11.6 percent is referred to as which one of the following?

• coupon rate

• face rate

• call rate

• yield to maturity

• interest rate

The current yield is defined as the annual interest on a bond divided by which one of the following?

• coupon

• face value

• market price

• call price

• dirty price

An indenture is:

• another name for a bond's coupon.

• the written record of all the holders of a bond issue.

• a bond that is past its maturity date but has yet to be repaid.

• a bond that is secured by the inventory held by the bond's issuer.

• the legal agreement between the bond issuer and the bondholders.

Atlas Entertainment has 15-year bonds outstanding. The interest payments on these bonds are sent directly to each of the individual bondholders. These direct payments are a clear indication that the bonds can accurately be defined as being issued:

• at par.

• in registered form. (Interest payments are sent directly to the registered owners)

• in street form.

• as debentures.

• as callable.

A bond that is payable to whomever has physical possession of the bond is said to be in:

• new-issue condition.

• registered form.

• bearer form.

• debenture status.

• collateral status.

The Leeward Company just issued 15-year, 8 percent, unsecured bonds at par. These bonds fit the definition of which one of the following terms?

• note

• discounted

• zero-coupon

• callable

• debenture