Bonds And Bond Markets(Financial Management And Financial Markets ) Questions and Answers

Question 1. The bond's promised rate of return is also considered as
  1.    yield to earnings
  2.    yield to investors
  3.    yield to maturity
  4.    yield to return
Explanation:-
Answer: Option C. -> yield to maturity
Answer: (c).yield to maturity
Question 2. A premium which reflects possibility of issuer who does not pay principal amount of bonds is called
  1.    seasoned risk premium
  2.    nominal risk premium
  3.    default risk premium
  4.    quoted risk premium
Explanation:-
Answer: Option C. -> default risk premium
Answer: (c).default risk premium
Question 3. The real risk-free interest rate in addition with an inflation premium is equal to
  1.    required interest rate
  2.    quoted risk-free interest rate
  3.    liquidity risk-free interest rate
  4.    premium risk-free interest rate
Explanation:-
Answer: Option B. -> quoted risk-free interest rate
Answer: (b).quoted risk-free interest rate
Question 4. An increase in interest rate leads to decline in value of
  1.    junk bonds
  2.    outstanding bonds
  3.    standing bonds
  4.    premium bonds
Explanation:-
Answer: Option B. -> outstanding bonds
Answer: (b).outstanding bonds
Question 5. The bonds issued by government and backed by U.S government are classified as
  1.    issued security
  2.    treasury bonds
  3.    U.S bonds
  4.    return security
Explanation:-
Answer: Option B. -> treasury bonds
Answer: (b).treasury bonds
Question 6. The right held with the corporations to call the issued bonds for redemption is considered as
  1.    artificial provision
  2.    call provision
  3.    redeem provision
  4.    original provision
Explanation:-
Answer: Option B. -> call provision
Answer: (b).call provision
Question 7. The bond that has been issued in very recent timing is classified as
  1.    mature issue
  2.    earnings issue
  3.    new issue
  4.    recent issue
Explanation:-
Answer: Option C. -> new issue
Answer: (c).new issue
Question 8. The type of options that permit the bond holder to buy stocks at stated price are classified as
  1.    provision
  2.    guarantee
  3.    warrants
  4.    convertibles
Explanation:-
Answer: Option C. -> warrants
Answer: (c).warrants
Question 9. When the price of bond is calculated below its par value, it is classified as
  1.    classified bond
  2.    discount bond
  3.    compound bond
  4.    consideration earnings
Explanation:-
Answer: Option B. -> discount bond
Answer: (b).discount bond
Question 10. The required rate of return in calculating bond's cash flow is also classified as
  1.    going rate of return
  2.    yield
  3.    earnings rate
  4.    both a and b
Explanation:-
Answer: Option D. -> both a and b
Answer: (d).both a and b
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