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1、精选优质文档-倾情为你奉上CHAPTER 5Interest Rate and Bond ValuationMultiple Choice QuestionsI.DEFINITIONSCOUPONa1.The stated interest payment, in dollars, made on a bond each period is called the bonds:a.coupon.b.face value.c.maturity.d.yield to maturity.e.coupon rate.Difficulty level: EasyFACE VALUEb2.The princ
2、ipal amount of a bond that is repaid at the end of the loan term is called the bonds:a.coupon.b.face value.c.maturity.d.yield to maturity.e.coupon rate.Difficulty level: EasyMATURITYc3.The specified date on which the principal amount of a bond is repaid is called the bonds:a.coupon.b.face value.c.ma
3、turity.d.yield to maturity.e.coupon rate.Difficulty level: EasyYIELD TO MATURITYd4.The rate of return required by investors in the market for owning a bond is called the:a.coupon.b.face value.c.maturity.d.yield to maturity.e.coupon rate.Difficulty level: EasyCOUPON RATEe5.The annual coupon of a bond
4、 divided by its face value is called the bonds:a.coupon.b.face value.c.maturity.d.yield to maturity.e.coupon rate.Difficulty level: EasyPAR BONDSa6.A bond with a face value of $1,000 that sells for $1,000 in the market is called a _ bond.a.par valueb.discountc.premiumd.zero coupone.floating rateDiff
5、iculty level: EasyDISCOUNT BONDSb7.A bond with a face value of $1,000 that sells for less than $1,000 in the market is called a _ bond.a.parb.discountc.premiumd.zero coupone.floating rateDifficulty level: EasyPREMIUM BONDSc8.A bond with a face value of $1,000 that sells for more than $1,000 in the m
6、arket is called a _ bond.a.parb.discountc.premiumd.zero coupone.floating rateDifficulty level: EasyUNFUNDED DEBTd9.The unfunded debt of a firm is generally understood to mean the firms:a.preferred stock.b.debts that mature in more than one year.c.debentures.d.debts that mature in less than one year.
7、e.secured debt.Difficulty level: EasyINDENTUREa10.The written, legally binding agreement between the corporate borrower and the lender detailing the terms of a bond issue is called the:a.indenture.b.covenant.c.terms of trade.d.form 5140.e.call provision.Difficulty level: EasyREGISTERED BONDSb11.The
8、form of bond issue in which the registrar of the company records ownership of each bond, with relevant payments made directly to the owner of record, is called the _ form.a.new-issueb.registeredc.bearerd.debenturee.collateralDifficulty level: MediumBEARER BONDSc12.The form of bond issue in which the
9、 bond is issued without record of the owners name, with relevant payments made directly to whoever physically holds the bond, is called the _ form.a.new-issueb.registeredc.bearerd.debenturee.collateralDifficulty level: EasyDEBENTURESe13.The unsecured debts of a firm with maturities greater than 10 y
10、ears are most literally called:a.unfunded liabilities.b.sinking funds.c.bonds.d.notes.e.debentures.Difficulty level: EasyNOTESd14.The unsecured debts of a firm with maturities less than 10 years are most literally called:a.unfunded liabilities.b.sinking funds.c.bonds.d.notes.e.debentures.Difficulty
11、level: EasySINKING FUNDa15.An account managed by the bond trustee for early bond redemption payments is called a:a.sinking fund.b.collateral payment account.c.deed in trust account.d.call provision.e.par value fund.Difficulty level: EasyCALL PROVISIONb16.An agreement giving the bond issuer the optio
12、n to repurchase the bond at a specified price prior to maturity is the _ provision.a.sinking fundb.callc.seniorityd.collaterale.trusteeDifficulty level: EasyCALL PREMIUMc17.The amount by which the call price exceeds the bonds par value is the:a.coupon rate.b.redemption value.c.call premium.d.origina
13、l-issue discount.e.call rate.Difficulty level: EasySENIORITYe18.In the event of default, _ debt holders must give preference to more _ debt holders in the priority of repayment distributions.a.short-term; long-termb.long-term; short-termc.senior; juniord.senior; subordinatede.subordinated; seniorDif
14、ficulty level: MediumDEFERRED CALL PROVISIONd19.A deferred call provision refers to the:a.open market price of a callable bond on a certain date.b.seniority of callable bonds to noncallable bonds in the event of corporate default.c.prohibition of a company from ever redeeming callable bonds.d.prohib
15、ition of a company from redeeming callable bonds prior to a certain date.e.amount by which the call price for a callable bond exceeds its par value.Difficulty level: EasyTREASURY BONDSa20.The long-term bonds issued by the United States government are called _ bonds.a.Treasuryb.municipalc.floating-ra
16、ted.junke.zero couponDifficulty level: EasyMUNICIPAL BONDSb21.The long-term bonds issued by state and local governments in the United States are called _ bonds.a.Treasuryb.municipalc.floating-rated.junke.zero couponDifficulty level: EasyZERO COUPON BONDSe22.A bond that makes no coupon payments and i
17、s initially priced at a deep discount is called a _ bond.a.Treasuryb.municipalc.floating-rated.junke.zero couponDifficulty level: EasyFLOATING-RATE BONDSc23.A bond that pays a variable amount of coupon interest over time is called a _ bond.a.Treasuryb.municipalc.floating-rated.junke.zero couponDiffi
18、culty level: EasyPROTECTIVE COVENANTe24.Parts of the indenture limiting certain actions that might be taken during the term of the loan to protect the interests of the lender are called:a.trustee relationships.b.sinking funds provisions.c.bond ratings.d.deferred call provisions.e.protective covenant
19、s.Difficulty level: EasyCONVERTIBLE BONDSd25.A bond which, at the election of the holder, can be swapped for a fixed number of shares of common stock at any time prior to the bonds maturity is called a _ bond.a.zero couponb.callablec.putabled.convertiblee.warrantDifficulty level: MediumPRICE TRANSPA
20、RENCYa26.A financial market is _ if it is possible to easily observe its prices and trading volume.a.transparentb.openc.orderedd.in equilibriume.chaoticDifficulty level: MediumCURRENT YIELDb27.The annual coupon payment of a bond divided by its market price is called the:a.coupon rate.b.current yield
21、.c.yield to maturity.d.bid-ask spread.e.capital gains yield.Difficulty level: EasyTIP BONDSb28.A TIP bonds interest rate is linked to:a.income.b.inflation.c.liquidity.d.maturity of the 30 year government bond.e.corporate tax rates.Difficulty level: MediumPUT BONDa29.A bond that allows the holder to
22、force the issuer to buy back bonds at a stated rate is called a:a.put bond.b.call bond.c.guaranteed bond.d.TIP bond.e.none of the above.Difficulty level: MediumNOMINAL RATESe30.Interest rates or rates of return on investments that have not been adjusted for the effects of inflation are called _ rate
23、s.a.couponb.strippedc.effectived.reale.nominalDifficulty level: MediumREAL RATESa31.Interest rates or rates of return on investments that have been adjusted for the effects of inflation are called _ rates.a.realb.nominalc.effectived.strippede.couponDifficulty level: MediumFISHER EFFECTb32.The relati
24、onship between nominal rates, real rates, and inflation is known as the:a.Miller and Modigliani theorem.b.Fisher effect.c.Gordon growth model.d.term structure of interest rates.e.interest rate risk premium.Difficulty level: MediumTERM STRUCTURE OF INTEREST RATESc33.The relationship between nominal i
25、nterest rates on default-free, pure discount securities and the time to maturity is called the:a.liquidity effect.b.Fisher effect.c.term structure of interest rates.d.inflation premium.e.interest rate risk premium.Difficulty level: MediumINFLATION PREMIUMd34.The _ premium is that portion of a nomina
26、l interest rate or bond yield that represents compensation for expected future overall price appreciation.a.default riskb.taxabilityc.liquidityd.inflatione.interest rate riskDifficulty level: EasyDEFAULT RISK PREMIUMa35.The _ premium is that portion of a nominal interest rate or bond yield that repr
27、esents compensation for the possibility of nonpayment by the bond issuer.a.default riskb.taxabilityc.liquidityd.inflatione.interest rate riskDifficulty level: EasyII.CONCEPTSBOND FEATURESd36.A bond with a 7 % coupon that pays interest semi-annually and is priced at par will have a market price of _
28、and interest payments in the amount of _ each.a.$1,007; $70b.$1,070; $35c.$1,070; $70d.$1,000; $35e.$1,000; $70Difficulty level: MediumBOND PRICES AND YIELDSe37.All else constant, a bond will sell at _ when the yield to maturity is _ the coupon rate.a.a premium; higher thanb.a premium; equal toc.at
29、par; higher thand.at par; less thane.a discount; higher thanDifficulty level: MediumBOND PRICES AND YIELDSd38.All else constant, a coupon bond that is selling at a premium, must have:a.a coupon rate that is equal to the yield to maturity.b.a market price that is less than par value.c.semi-annual int
30、erest payments.d.a yield to maturity that is less than the coupon rate.e.a coupon rate that is less than the yield to maturity.Difficulty level: EasyBOND PRICESc39.The market price of a bond is equal to the present value of the:a.face value minus the present value of the annuity payments.b.annuity p
31、ayments plus the future value of the face amount.c.face value plus the present value of the annuity payments.d.face value plus the future value of the annuity payments.e.annuity payments minus the face value of the bond.Difficulty level: EasyBOND PRICESa40.As the yield to maturity increases, the:a.a
32、mount the investor is willing to pay to buy a bond decreases.b.longer the time to maturity.c.lower the coupon rate desired by that investor.d.higher the price the investor offers to buy a bond.e.lower the rate of return desired by the investor.Difficulty level: EasySEMIANNNUAL BONDSe41.American Fort
33、unes is preparing a bond offering with an 8 % coupon rate. The bonds will be repaid in 10 years. The company plans to issue the bonds at par value and pay interest semiannually. Given this, which of the following statements are correct?I.The initial selling price of each bond will be $1,000.II.After
34、 the bonds have been outstanding for 1 year, you should use 9 as the number of compounding periods when calculating the market value of the bond.III.Each interest payment per bond will be $40.IV.The yield to maturity when the bonds are first issued is 8 %.a.I and II onlyb.II and III onlyc.II, III, a
35、nd IV onlyd.I, II, and III onlye.I, III, and IV onlyDifficulty level: MediumSEMIANNUAL BONDS AND EFFECTIVE ANNUAL RATEd42.The newly issued bonds of the Wynslow Corp. offer a 6 % coupon with semiannual interest payments. The bonds are currently priced at par value. The effective annual rate provided
36、by these bonds must be:a.equal to 3 %.b.greater than 3 % but less than 4 %.c.equal to 6 %.d.greater than 6 % but less than 7 %.e.equal to 12 %.Difficulty level: MediumINTEREST RATE RISKd43.Which one of the following statements is correct concerning interest rate risk as it relates to bonds, all else
37、 equal?a.The shorter the time to maturity, the greater the interest rate risk.b.The higher the coupon rate, the greater the interest rate risk.c.For a bond selling at par value, there is no interest rate risk.d.The greater the number of semiannual interest payments, the greater the interest rate ris
38、k.e.The lower the amount of each interest payment, the lower the interest rate risk.Difficulty level: MediumINTEREST RATE RISKe44.Which one of the following bonds has the greatest interest rate risk?a.5-year; 9 % couponb.5-year; 7 % couponc.7-year; 7 % coupond.9-year; 9 % coupone.9-year; 7 % couponD
39、ifficulty level: MediumINTEREST RATE RISKb45.Interest rate risk _ as the time to maturity increases.a.increases at an increasing rateb.increases at a decreasing ratec.increases at a constant rated.decreases at an increasing ratee.decreases at a decreasing rateDifficulty level: MediumINTEREST RATE RI
40、SKc46.You own a bond that has a 7 % coupon and matures in 12 years. You purchased this bond at par value when it was originally issued. If the current market rate for this type and quality of bond is 7.5 %, then you would expect:a.the bond issuer to increase the amount of each interest payment on th
41、ese bonds.b.the yield to maturity to remain constant due to the fixed coupon rate.c.to realize a capital loss if you sold the bond at the market price today.d.todays market price to exceed the face value of the bond.e.the current yield today to be less than 7 %.Difficulty level: MediumINTEREST RATE
42、RISKb47.A brand with semi-annual interest payments, all else equal, would be priced _ than one with annual interest payments.a.higherb.lowerc.the samed.it is impossible to telle.either higher or the sameDifficulty level: MediumYIELD TO MATURITY AND CURRENT YIELDe48.All else constant, as the market p
43、rice of a bond increases the current yield _ and the yield to maturity _a.increases; increases.b.increases; decreases.c.remains constant; increases.d.decreases; increases.e.decreases; decreases.Difficulty level: MediumBOND FEATURESd49.Which of the following statements concerning bond features is (are) correct?I.Bondholders generally have voting power in a corporation.II.Bond interest is tax-deductible as a business expense.III.The repayment of the bond principle is tax-deductible.IV.Failure to pay either the interest payments or the bond principle as agreed can cause a