Chapter 08 - Interest Rates and Bond Valuation
7. The annual coupon of a bond divided by its face value is
called the bonds:
1. A bond that makes no coupon payments and is initially
A. coupon.
priced at a deep discount is called a _____ bond.
B. face value.
A. Treasury
B. municipal C. maturity.
C. floating-rate D. yield to maturity.
D. junk E. coupon rate.
E. zero coupon
8. A bond with a face value of $1,000 that sells for $1,000 in
2. An asset characterized by cash flows that increase at a the market is called a _____ bond.
constant rate forever is called a: A. par value
B. discount
A. growing perpetuity.
B. growing annuity. C. premium
C. common annuity. D. zero coupon
D. perpetuity due. E. floating rate
E. preferred stock.
9. A bond with a face value of $1,000 that sells for less than
3. The stated interest payment, in dollars, made on a bond $1,000 in the market is called a _____ bond.
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