Multiple Choice Questions

Miller Farm Products is issuing a 15-year, unsecured bond. Based on this information, youknow that this debt can be described as a:
  • Dirty price
  • Face value
  • debenture
  • Zero coupon
A bond trader just purchased and resold a bond. The amount of profit earned by the trader from this purchase and resale is referred to as the:
  • call protected
  • bid-ask spread
  • Sinking fund
  • Fallen angel
Dexter, Inc. has a bond issue outstanding. The issue's indenture provision prohibits the firm from redeeming the bonds during the first three years. This provision is referred to as the _____ provision.
  • Sinking fund
  • deferred call
  • Fallen angel
  • Maturity date
Which one of the following terms refers to a bond's rate of return that is required by the marketplace?
  • Dirty price
  • Zero coupon
  • Yield to maturity
  • Maturity date
A call provision grants the bond issuer the:
  • option of repurchasing the bonds priorto maturity at a prespecified price.
  • pays coupon payments directly to the owner of record.
  • unsecured debt that is generally payable within the next 10 years
  • call price exceeds the par value.
This morning, Jeff found a bond certificate lying on the floor of a bank. He picked it up and noticed that the bond matured today. He presented the bond to the bank teller and received both the principal and interest payment. The bond that Jeff found must have been which one of the following?
  • deferred call
  • Bearer form bond
  • Zero coupon
  • Yield to maturity
The call premium is the amount by which the:
  • call price exceeds the par value.
  • Annual interest payment
  • option of repurchasing the bonds priorto maturity at a prespecified price.
  • limits the actions of the borrower.
When you refer to a bond's coupon, you are referring to which one of the following?
  • Annual interest payment
  • call price exceeds the par value.
  • Current market price
  • Yield to maturity
On which one of the following dates is the principal amount of a bond repaid?
  • Yield to maturity
  • coupon rate
  • Dirty price
  • Maturity date
The current yield on a bond is equal to the annual interest divided by which one of the following?
  • Annual interest payment
  • coupon rate
  • Yield to maturity
  • Current market price
What term is used to describe an account that a bond trustee manages for the sole purpose of redeeming bonds early?
  • Zero coupon
  • Dirty price
  • Sinking fund
  • Yield to maturity
Manning, Inc. originally issued bonds that were rated investment grade. These bonds have now been downgraded to junk status. Which one of the following terms applies to this situation?
  • Face value
  • deferred call
  • Fallen angel
  • call protected
The price at which a dealer will purchase a bond is called the _____ price.
  • Dirty price
  • bid price
  • Clean price
  • asked price
Which one of the following is the price that an investor pays to purchase an outstanding bond?
  • Clean price
  • Dirty price
  • asked price
  • Zero coupon
Which one of the following terms applies to a bond that initially sells at a deep discount and pays no interest payments?
  • Dirty price
  • Zero coupon
  • Yield to maturity
  • Clean price
A note is a(n):
  • pays coupon payments directly to the owner of record.
  • limits the actions of the borrower.
  • unsecured debt that is generally payable within the next 10 years
  • option of repurchasing the bonds priorto maturity at a prespecified price.
The price atwhich an investor can purchase a bond from a dealer is called the _____ price.
  • Dirty price
  • Clean price
  • asked price
  • bid price
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Multiple Choice Questions
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