Answers6 - e 1 a b c d e The annual coupon of a bond...

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e 1. The annual coupon of a bond divided by its face value is called the bond’s: a. coupon. b. face value. c. maturity. d. yield to maturity. e. coupon rate. b 2. A bond with a face value of $1,000 that sells for less than $1,000 in the market is called a _____ bond. a. par b. discount c. premium d. zero coupon e. floating rate e 3. In the event of default, _____ debt holders must give preference to more _____ debt holders in the priority of repayment distributions. a. short-term; long-term b. long-term; short-term c. senior; junior d. senior; subordinated e. subordinated; senior e 4. Interest rates or rates of return on investments that have not been adjusted for the effects of inflation are called _____ rates. a. coupon b. stripped c. effective d. real e. nominal c 5. You own a bond that has a 7 percent coupon and matures in 12 years. You purchased this bond at par value when it was originally issued. If the current market rate for this type and quality of bond is 7.5 percent, then you would expect:
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This note was uploaded on 06/15/2008 for the course ACC 501 504 taught by Professor Na during the Spring '08 term at University of Texas.

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Answers6 - e 1 a b c d e The annual coupon of a bond...

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