18 Questions
What does it mean when a $100 face value bond sells for $110 in the market?
The bond is selling at a premium because the market expects high inflation.
In the context of Corporate Bonds, what distinguishes First Mortgage Bonds from Second Mortgage Bonds?
First Mortgage bonds have the first claim to the assets.
What determines the credit ratings or worthiness of Corporate Debentures?
Company's cash flow and unencumbered assets.
What is the characteristic of Subordinated Debentures compared to other forms of debt?
They are ranked behind other forms of debt for repayment.
What happens to a corporation's Commercial Paper when it is guaranteed by a bank?
It becomes a Banker's Acceptance.
How do Strip Bonds differ from traditional corporate debt instruments?
Strip Bonds involve separating the principal and interest payments of a bond.
What is the premium or discount for bonds that are priced at $90 per $100 of face value?
The bond is priced at a discount
Which type of bonds have maturities ranging from 5 to 10 years?
Medium-term bonds
What type of bond has a coupon rate that adjusts periodically based on market rates?
Floating-rate bond
Which of the following bond features allows the issuer to repurchase the bond before the maturity date?
Callable bonds
What type of interest income are price changes considered for tax purposes?
Interest income
Which of the following statements is true regarding the bond market and the equity market?
The bond market is larger than the equity market
What is the usual par or face value of a bond?
$100
What does it mean when a bond is sold at a discount?
The bond is sold for less than its face value.
What is the difference between a bond and a debenture?
A bond is secured by specific assets, while a debenture is unsecured.
What does it mean when a bond is sold at a premium?
The bond is sold for more than its face value.
What is a bond coupon rate?
The amount of interest paid on a bond.
What is bond maturity?
The remaining time until a bond's principal is repaid.
Test your knowledge on bond market jargon including concepts like face value, interest income, marketable bonds, and bond maturity periods. Learn about the distinction between short-term, medium-term, and long-term bonds.
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