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Fundamentals of Corporate Finance, 3e (Berk/DeMarzo/Harford)
Chapter 6 Bonds
6.1 Bond Terminology
1) The coupon value of a bond is the face value of the bond.
Answer: FALSE
Diff: 1 Var: 1
Skill: Conceptual
AACSB Objective: Analytic Skills
Author: DS
Question Status: Previous Edition
2) A bond is said to mature on the date when the issuer repays its notional value.
Answer: TRUE
Diff: 1 Var: 1
Skill: Conceptual
AACSB Objective: Analytic Skills
Author: DS
Question Status: Previous Edition
3) Which of the following best illustrates why a bond is a type of loan?
A) The issuers of bonds make regular payments to bondholders.
B) When a company issues a bond, the buyer of that bond becomes an owner of the issuing company.
C) Funds raised are used to finance long-term projects.
D) When an investor buys a bond from an issuer, the investor is giving money to the issuer, with the assurance that it will be repaid at a date in the future.
Answer: D
Diff: 1 Var: 1
Skill: Conceptual
AACSB Objective: Analytic Skills
Author: DS
Question Status: Revised
4) What is the coupon payment of a 25-year $1000 bond with a 4.5% coupon rate with quarterly payments?
A) $3.75
B) $11.25
C) $22.50
D) $45.00
Answer: B
Explanation: B) $1000 × 0.045 / 4 = $11.25
Diff: 1 Var: 50+
Skill: Analytical
AACSB Objective: Analytic Skills
Author: DS
Question Status: Revised
5) What is the coupon payment of a 15-year $10,000 bond with a 9% coupon rate with semiannual payments?
A) $150.00
B) $450
C) $900.00
D) $1800.00
Answer: B
Explanation: B) $10,000 × 0.09/2 = $450
Diff: 1 Var: 50+
Skill: Analytical
AACSB Objective: Analytic Skills
Author: DS
Question Status: Revised
6) A corporate bond makes payments of $9.67 every month for ten years with a final payment of $2009.67. Which of the following best describes this bond?
A) a 10-year bond with a face value of $2,000 and a coupon rate of 4.8%...