Chapter 6 Quiz

Chapter 6 Quiz - Chapter 6 Quiz Student: _ 1. A zero-coupon...

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Chapter 6 Quiz Student: ___________________________________________________________________________ 1. A zero-coupon bond refers to a bond which: A. Does not pay any coupon payments because the issuer is in default B. Pays coupons only if the bond price is above face value C. Promises a single future payment D. Pays coupons only once a year 2. A consol is: A. A bond that makes periodic interest payments forever but never matures B. A bond with a maturity date exceeding 10 years C. A form of a bond that is issued quite often by the U.S. Treasury D. Another name for a zero-coupon bond 3. The most common form of zero-coupon bonds found in the United States is: A. U.S. Treasury bills B. 30-year U.S. Treasury bonds C. Municipal bonds D. AAA rated corporate bonds 4. Once you buy a coupon bond, which of the following can change? A. Face value B. Yield to maturity C. Coupon rate D. Coupon payment 5. Which of the following makes fixed payments indefinitely? A. Amortized loan B. Coupon bond C. Consol D. Zero-coupon bond
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6. A 10-year Treasury note as a face value of $1,000, price of $1,200, and a 7.5% coupon rate. Based on this information, we know: A. The current yield is equal to 8.33% B. The present value is greater than its price C. The coupon payment on this bond is equal to $75 D. The coupon payment on this bond is equal to $90 7. If the annual interest rate is 5% (.05), the price of a one-year Treasury bill per $100 of face value would be: A. $95.00 B. $96.10 C. $97.50 D. $95.24 8. When a loan is amortized , it means: A. The borrower is in default B. The principal in never repaid, only interest C. The interest is due entirely at the maturity date D. The principal and interest are paid off by the borrower over the life of the loan 9. Most home mortgages are good examples of: A. Fixed-payment loans B. Consols C. Zero-coupon bonds D. Coupon bonds 10. Which of the following statements is most accurate? A. Yield to maturity will exceed the coupon rate if the bond is purchased for face value B. Yield to maturity is the same as the coupon rate if the bond is purchased for face value and held to maturity C. Yield to maturity is equal to the coupon rate if the bond is held to maturity D. Yield to maturity is the same as the coupon rate 11. When the price of a bond is above face value: A. The yield to maturity will be above the coupon rate B. The yield to maturity will equal the current yield C. The yield to maturity is below the coupon rate D. The yield to maturity will equal the coupon rate
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12. When the price of a bond is below the face value, the yield to maturity: A. Will equal the coupon rate B. Is below the coupon rate C. Will be above the coupon rate D. Will equal the current yield 13. When the price of a bond equals the face value: A. The yield to maturity is greater than the current yield B. The yield to maturity will be above the coupon rate C. The yield to maturity will be below the coupon rate D. The current yield is equal to the coupon rate 14. The current yield of a bond:
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This note was uploaded on 04/12/2011 for the course FIN 321 taught by Professor Smith during the Spring '08 term at Rogers State.

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Chapter 6 Quiz - Chapter 6 Quiz Student: _ 1. A zero-coupon...

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