Recent Lessons

Show all results for ""

Feature Overview

Ace your exams with our all-in-one platform for creating and sharing quizzes and tests.

Quizzes

Create quizzes and tests automatically from your content using AI.

Flashcards

Automatically turn your notes into digital flashcards.

Share, Export & Embed

Share with classmates or export to Excel and your learning management system.

Stats & Reporting

Auto-grading quizzes and tests with detailed stats and reports.

Mobile Apps

The smarter way to study – wherever you are.

Pricing

Search...

12 Questions

1 Views

Fixed-Income Securities Overview

Choose a study mode

Play Quiz

Study Flashcards

Spaced Repetition

Chat to lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the purpose of the coupon payments made by the borrower to the bondholder?

To compensate the bondholder for the time value of money

To cover the administrative costs of the bond issuance

To provide the bondholder with a regular fixed income (correct)

To pay back the principal or par value of the bond

What is the relationship between the par value of a bond and the coupon rate?

The coupon rate determines the par value

The par value determines the coupon rate (correct)

The par value is equal to the coupon rate multiplied by the term of the bond

The par value and coupon rate are independent of each other

How is the semi-annual coupon payment calculated?

By multiplying the par value of the bond by the annual coupon rate and dividing by 2 (correct)

By adding the par value of the bond to the annual coupon rate and then dividing by 2

By multiplying the par value of the bond by the annual coupon rate and dividing by 4

By dividing the par value of the bond by the annual coupon rate and then dividing by 2

What happens to the bondholder when the bond matures?

The bondholder receives the final coupon payment and the par value of the bond Signup and view all the answers

What is the significance of the bond trading at a price of 100?

The bond is trading at its face value or par Signup and view all the answers

What is the most common bond denomination?

$1,000 Signup and view all the answers

What is the primary purpose of fixed-income securities?

To facilitate lending between investors and borrowers Signup and view all the answers

Which of the following is NOT a common type of fixed-income security mentioned in the text?

Preferred stocks Signup and view all the answers

What is the term used for the regular payments made from the issuer to the holder of a fixed-income security?

Coupons Signup and view all the answers

What is one reason why corporations may issue fixed-income securities, according to the text?

To finance their operations and growth plans Signup and view all the answers

What is the term used for the amount that the issuer of a fixed-income security promises to repay at maturity?

All of the above Signup and view all the answers

Why might a corporation choose to borrow money through fixed-income securities?

To take advantage of leverage if they can earn a higher return than the cost of borrowing Signup and view all the answers