Bond Fundamentals and Characteristics Quiz
Explore fixed income with this quiz covering bond basics, types, risks, and more. Test yourself now!
#1
What is a bond?
A type of stock
A loan made by an investor to a borrower
A form of insurance
A government document
#2
What is the coupon rate of a bond?
The rate at which the bond is sold in the market
The rate at which the bond pays interest to the bondholder
The rate at which the bond matures
The rate at which the bond can be redeemed
#3
What is the duration of a bond?
The time until the bond matures
The time until the bond issuer repays the principal
A measure of a bond's price sensitivity to interest rate changes
The time until the bond can be redeemed
#4
What is a callable bond?
A bond that can be converted into shares of stock
A bond that can be redeemed by the issuer before its maturity date
A bond that pays interest at different rates
A bond that cannot be traded on the secondary market
#5
What is the difference between a bond's face value and its market price called?
Yield to maturity
Coupon rate
Yield spread
Discount rate
#6
What does the credit rating of a bond indicate?
The bond's maturity date
The issuer's ability to repay the bond's principal and interest
The bond's coupon rate
The bond's yield to maturity
#7
What is a junk bond?
A bond issued by a financially stable government
A bond with a credit rating below investment grade
A bond with a high coupon rate
A bond with a face value below $1000
#8
What is yield to maturity (YTM)?
The annual rate of return earned on a bond if it is held to maturity
The annual interest rate of a bond
The current market price of a bond
The annual dividend payment of a bond
#9
What is a zero-coupon bond?
A bond with no maturity date
A bond with a coupon rate of zero percent
A bond issued by a government
A bond that pays interest annually
#10
What is duration risk in bond investing?
The risk that the bond issuer will default
The risk that the bond will be called before maturity
The risk of loss due to changes in interest rates
The risk of loss due to inflation
#11
What is a convertible bond?
A bond that can be converted into shares of stock
A bond that pays interest at different rates
A bond that cannot be traded on the secondary market
A bond that matures in less than one year
#12
What is the relationship between bond prices and interest rates?
Inverse relationship
Direct relationship
No relationship
Random relationship
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