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Questions and Answers
What is the primary factor that determines a bond’s value?
What is the primary factor that determines a bond’s value?
- The par value of the bond (correct)
- The coupon rate of the bond
- The risk of the bond, or financial stability of the issuer
- The maturity of the bond
When is a bond in default?
When is a bond in default?
- When the issuer fails to give the bond a rating
- When the issuer has a low credit rating
- When the issuer publicizes the rating of the bond
- When the issuer has not kept up with the interest or other required payments (correct)
What are the three main components of a bond?
What are the three main components of a bond?
- Par value, maturity, beneficiary
- Par value, coupon rate, beneficiary
- Par value, maturity, coupon rate (correct)
- Par value, coupon rate, IRAs
A bond’s annual coupon interest divided by the purchase price of the bond is equal to its
A bond’s annual coupon interest divided by the purchase price of the bond is equal to its
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What types of bonds are issued by state and local governments?
What types of bonds are issued by state and local governments?
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What is the difference between capital markets and money markets?
What is the difference between capital markets and money markets?
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In a primary market, only the original issuer can sell or repurchase a financial asset.
In a primary market, only the original issuer can sell or repurchase a financial asset.
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In general, which bond would pay a higher interest rate on your investment: a Treasury bond or a junk bond?
In general, which bond would pay a higher interest rate on your investment: a Treasury bond or a junk bond?
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