WorksheetsBonds (Introduction to Finance)
Total questions: 8
Worksheet time: 4mins
The Fisher Effect defines the relationship between....
Real rates, nominal rates, and inflation.
Inflation, deflation, and real rates.
Nominal rates, deflation, and real rates.
Real rates and nominal rates.
Premium bond means...
Coupon rate equals to yield to maturity rate
Coupon rate > YTM
Coupon rate < YTM
Bond price < Par Value
Suppose you are looking at a bond that has 10% annual coupon and a face value of $1,000. There are 20 years to maturity and the yield to maturity is 8%. What is the price of this bond?
$981.81
$214.55
$1195.34
$1196.36
If we acquire a 10% real return and we expect inflation to be 8%, what is the nominal rate?
The nominal rate equals to the real rate
19%
12%
18%
It is not required for a company to do the bond-rating and the cost of the rating may be substantial. But why still some companies pay the rating agency to rate the bonds?
To attract more investors.
To ensure a good reputation of the company.
To increase investors' confidence in investing.
All of above.
Issuing (A) means loaning money to that company and regular interest payments would be the exchange. While (B) means buying ownership of a company and no regular payments compromised.
(A) Bonds (B) Stocks
(A) Stocks (B) Bonds
(A) Bank Loan (B) Dividend
(A) Nominal rate (B) Real rate
What is maturity date?
The date on which the bond discounted.
The date on which the bond is issued.
The date on which the principal amount of the bond is paid.
The date on which all bonds in the market are starting to be sold.
AAA rating by S&P or Aaa by Moody means?
The bond is a prime quality one.
It is a high grade bond.
The bond may be speculative in nature.
More susceptible to adverse effects of changes in circumstances.
