Worksheetschapter 4 part 2 bond market
Total questions: 10
Worksheet time: 5mins
What does a bond represent?
An ownership interest in a company
A debt obligation owed by the issuer to the investor
A form of government tax
A derivative security
The par (or face) value of a bond refers to:
The interest payment received each year
The market value of the bond
The amount the issuer must repay at maturity
The profit earned by the investor
Which of the following best describes the coupon rate of a bond?
The current market yield of the bond
The interest rate that determines periodic payments to investors
The inflation-adjusted rate
The difference between price and par value
Which of the following bonds are long-term instruments traded in Malaysia’s capital market?
Treasury bills and negotiable certificates of deposit
Money market funds
Malaysian Government Securities (MGS) and corporate bonds
Bankers’ acceptances
What is the main purpose of Treasury bonds issued by the Malaysian government?
To regulate bank lending
To finance the national debt
To fund private sector projects
To stabilize the exchange rate
What is a callable bond?
A bond that can be converted into shares
A bond that allows the issuer to redeem it before maturity
A bond that adjusts its coupon with inflation
A bond backed by collateral
Which of the following statements about convertible bonds is TRUE?
They cannot be traded in the secondary market
They can be converted into shares of common stock
They have no maturity date
They offer no interest payments
Which type of corporate bond is backed by collateral?
Secured bond
Unsecured bond
Subordinated bond
Junk bond
What is the main difference between a premium bond and a discount bond?
Premium bonds pay no coupon
Premium bonds are sold above par value, discount bonds below par value
Premium bonds are government bonds, discount bonds are corporate
There is no difference between them
Which of the following risks is most relevant to bond investors when interest rates rise?
Credit risk
Liquidity risk
Interest rate risk
Inflation risk
