FinPracticeQ - FIN 335 Test II Chp 5-8 Name:_ Summer 2010...

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FIN 335 Test II – Chp 5-8 Name:________________________________________________ Summer 2010 Dr. Clay M. Moffett 1. The principal amount of a bond that is repaid at the end of the loan term is called the: A. face value. B. premium value. C. clean price. D. dirty price. E. compounded price. 2. The coupon rate for a bond is best defined as the: A. annual interest divided by the current market price. B. annual coupon divided by the dirty market price. C. annual interest divided by the clean market price. D. semi-annual interest divided by the par value. E. annual interest divided by the face value. 3. The annual interest on a bond divided by the bond's market price is called the: A. yield to maturity. B. yield to call. C. total yield. D. current yield. E. required yield. 4. Amy found a bond lying in a street. She picked it up, detached the appropriate bond coupon, and collected the current interest payment. Which type of bond did Amy find? A. bearer B. coupon C. street D. registered E. secure 5. A debenture is: A. long-term debt secured by fixed assets of the borrower. B. long-term debt secured by real estate. C. unsecured debt that generally matures in ten years or more. D. unsecured debt that generally matures in less than ten years. E. any type of debt that is short-term in nature. 6. A call provision in a bond agreement grants the issuer the right to: A. call the bondholder to determine if he or she would like to extend the term of the bond agreement. B. replace the bonds with equity securities. C. change the coupon rate provided the bondholders are notified in advance. D. buy back the bonds on the open market prior to maturity. E. repurchase the bonds prior to maturity at a pre-specified price. 7. A bond that pays no interest payments and sells at a deep discount is called a(n) _____ bond. A. callable B. income C. zero coupon D. convertible E. tax-free
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8. The Fisher effect expresses the relationship between: A. the yield to call and the yield to maturity. B. the current yield and the yield to call. C. coupon and real rates. D. real and nominal rates. E. nominal and coupon rates. 9. A $1,000 face value bond is currently quoted at 93.7. The bond pays semiannual payments of $32.50 and matures in 8 years. What is the coupon rate? A. 3.25 percent B. 4.89 percent C. 5.00 percent D. 6.50 percent E. 7.56 percent 10. The 8.5 percent annual coupon bonds of Eberly, Inc. are selling for $930.12. The bonds have a face value of $1,000 and mature in 9 years. What is the yield to maturity? A. 4.84 percent B. 5.24 percent C. 8.12 percent D. 9.31 percent E. 9.70 percent 11. The Trading Depot has $1,000 face value bonds outstanding with a market price of $980. The bonds pay interest annually, mature in 8 years, and have a yield to maturity of 7.339 percent. What is the current yield? A. 7.00 percent
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FinPracticeQ - FIN 335 Test II Chp 5-8 Name:_ Summer 2010...

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