#1
What is the term used to describe the interest rate stated on a bond when it is issued?
Coupon rate
ExplanationRate stated on bond issuance.
#2
Which of the following is a characteristic of a premium bond?
Its coupon rate is higher than the market rate.
ExplanationHigher coupon rate than market.
#3
Which of the following is NOT a type of bond yield?
Nominal yield
ExplanationExclusion from bond yield types.
#4
What is the term used to describe the process of converting a bond's future cash flows into their present value?
Discounting
ExplanationConverting future cash flows.
#5
Which of the following is NOT a credit rating agency that evaluates bond issuers?
Bureau of Labor Statistics
ExplanationNon-credit rating agency.
#6
What does the term 'par value' represent in bond accounting?
The face value of the bond.
ExplanationFace value of the bond.
#7
Which of the following statements is true regarding the relationship between bond prices and interest rates?
Bond prices and interest rates have an inverse relationship.
ExplanationInverse relationship with interest rates.
#8
What is the formula to calculate the yield to maturity of a bond?
YTM = (Annual interest payment / Current market price) x 100%
ExplanationFormula for yield to maturity.
#9
What does the term 'call provision' mean in bond agreements?
The bond issuer has the right to buy back the bond before maturity.
ExplanationIssuer's right to buy back bond.
#10
What does the term 'callable bond' mean?
A bond that the issuer can redeem before its maturity date.
ExplanationIssuer's right to redeem.
#11
What is the term used to describe the risk associated with changes in interest rates affecting bond prices?
Interest rate risk
ExplanationRisk from interest rate changes.
#12
What is the main difference between a zero-coupon bond and a regular bond?
Zero-coupon bonds do not pay periodic interest.
ExplanationNo periodic interest payment.
#13
What is the purpose of using duration as a measure of bond risk?
To measure the bond's sensitivity to changes in interest rates.
ExplanationMeasuring sensitivity to rate changes.
#14
Which of the following statements is true regarding a bond's duration?
A longer duration implies higher interest rate risk.
ExplanationLonger duration, higher risk.
#15
What does the term 'maturity date' refer to in bond accounting?
The date when the bond reaches its final payment
ExplanationFinal payment date.