Bond Basics Quiz

A bond that makes no coupon payments and is initially priced at a deep discount is called a ________ bond.

• Treasury

• municipal

• floating-rate

• junk

• zero coupon

The stated interest payment, in dollars, made on a bond each period is called the bond's:

• coupon.

• face value.

• maturity.

• yield to maturity.

• coupon rate.

The principal amount of a bond that is repaid at the end of the loan term is called the bond's:

• coupon.

• face value.

• maturity.

• yield to maturity.

• coupon rate.

The specified date on which the principal amount of a bond is repaid is called the bond's:

• coupon.

• face value.

• maturity.

• yield to maturity.

• coupon rate.

The rate of return required by investors in the market for owning a bond is called the:

• coupon.

• face value.

• maturity.

• yield to maturity.

• coupon rate.

The annual interest paid by a bond divided by the bond's face value is called the:

• coupon.

• face value.

• maturity.

• yield to maturity.

• coupon rate.

A bond with a face value of $1,000 that sells for $1,000 in the market is called a ________ bond.

• par value

• discount

• premium

• zero coupon

• floating rate

A bond with a face value of $1,000 that sells for less than $1,000 in the market is called a ________ bond.

• par

• discount

• premium

• zero coupon

• floating rate

A bond with a coupon rate of 6 percent that pays interest semiannually and is priced at par will have a market price of ________ and interest payments in the amount of ________ each.

• $1,006; $60

• $1,060; $30

• $1,060; $60

• $1,000; $30

• $1,000; $60

All else constant, a bond will sell at ________ when the yield to maturity is ________ the coupon rate.

• a premium; greater than

• a premium; equal to

• at par; greater than

• at par; less than

• a discount; greater than