Which of the following statements about bonds is NOT true? O The less marketable a bond, the higher the yield O Municipal bonds have lower yields than similar corporate bonds. O The greater the default risk, the greater the yield. O bond prices and interest rates are directly related
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- 1. Types of bonds Fixed-income securities consist of debt instruments and preferred stock. Bonds are debt securities in which a borrower promises to pay a specified interest rate and principal at a future date. Which of the following statements about Treasury bonds is the most accurate? O Treasury bonds have a very small amount of default risk, so they are not completely riskless. O Treasury bonds are completely riskless. O Treasury bonds are not completely riskless, since their prices will decline when interest rates rise. Based on the information given in the following statement, answer the questions that follow: In July 2009, Walmart sold 100 billion yen of five-year samurai bonds. Lead managers in the deal were Mizuho Securities, BNP Paribas, and Mitsubishi UFJ Securities. Who is the issuer of the bonds? O Mitsubishi UFJ Securities O BNP Paribas O Walmart What type of bonds are these? O Corporate bonds O Municipal bonds O Government bonds O O1. Types of bonds Fixed-income securities consist of debt instruments and preferred stock. Bonds are debt securities in which a borrower promises to pay a specified interest rate and principal at a future date. A. Which of the following statements about Treasury bonds is the most accurate? Treasury bonds have a very small amount of default risk, so they are not completely riskless. Treasury bonds are completely riskless. Treasury bonds are not completely riskless, since their prices will decline when interest rates rise. B. Based on the information given in the following statement, answer the questions that follow: In July 2009, Hungary successfully issued 1 billion euros in bonds. The transaction was managed by Citigroup. Who is the issuer of the bonds? The Hungarian government Hungary Bank Citigroup C. What type of bonds are these? Municipal bonds Corporate bonds Government bondsWhy is the yield of bonds with credit risk higher than that of otherwise identical default-free bonds?
- if the market rate of interest is lower than the stated rate, bonds will sell at an amount ?Which of the following claims is true?a. Long-term bonds have lower interest rate risk than short-term bonds but higher reinvestment rate risk.b. Long-term bonds have higher interest rate exposure and lower reinvestment risk than short-term bonds.c. As compared to coupon-bearing bonds, zero coupon bonds have higher interest rate exposure but lower reinvestment rate risk.d. As interest rates rise, all bond prices rise, although the increase would be greatest for bonds with lower interest rate danger.e. One drawback to zero coupon bonds is that you do not have to incur interest on them before you sell the bond or it matures.1. Which of the following is true about bonds payable?A. Bonds payable is always reported as a non-current liability.B. Bonds are usually issued as a form of stock financing.C. Coupon interest payments on term bonds fluctuate depending on the market rate on the dateof interest payment.D. It is possible that the total proceeds from the bond issuance equal its maturity value.2. Which of the following is NOT TRUE about bond interest?A. These are usually paid at designated coupon interest payment dates.B. If a bond is issued at a discount, interest payment is lower than interest expense for the sameperiod.C. If a bond is issued at a discount, interest payment increases over the life of the bond since thecarrying value increases.D. A bond issued at more than face value is a bond issued at a premium.3. At the maturity date, bonds are redeemed at:A. Original issue priceB. Face valueC. Market value on redemption dateD. Market value on redemption date, less any related costs4. If the market…
- What’s TRUE regarding long-term and short-term bonds (assume they have the same par value and coupon rate)? A)Long-term bonds have higher interest rate risk. B)Short-term bonds have lower reinvestment risk. C)Long-term bonds have higher reinvestment risk. D)Short-term bonds have higher interest rate risk.Which one of the following statements is NOT true? As interest rates increase, bond prices increase. Interest rate risk is the risk that bond prices will change as interest rates change. Interest rate changes and bond prices are inversely related. Long-term bonds have more price volatility than short-term bonds of similar riskTrue or false: The financial status of the issuer will affect the coupon rate that issuer pays on its bonds. O True O False
- which of the below has a negative correlation with the return on bonds ? a. Taxability b. Default risk c. Callable bonds d. Liquidity e. DebentureWhich of the following statements is correct? Subordinated debt has less default risk than senior debt. Junk bonds typically have a lower yield to maturity relative to investment grade bonds. A debenture is a unsecured bond. None of the statements are correct.Can I use the yield to maturity (YTM) on a bond issued by the company as the cost of debt? A Yes, you can use the YTM B No, you cannot use the YTM C Only if the bond is liquid and has not special feature embedded in it D There is not enough information to answer this problem