call provisions on corporate bonds are generally included to protect the issuer against large declines in...
call provisions on corporate bonds are generally included to protect the issuer against large declines in interest rates. They affect the actual maturity of the bond but not its price. True or Falso
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call provisions on corporate bonds are generally included to
protect the issuer against large declines in...
Which of the following statements is CORRECT about repayment provisions of bonds? A) The issuer of...
Which of the following statements is CORRECT about repayment provisions of bonds? A) The issuer of a callable bond will exercise the call option when the market interest rate exceeds the coupon rate of the bond. B) A convertible bond generally pays a higher coupon rate than an identical non-convertible bond. C) Bonds with a sinking funds provision can be paid back later than their maturity date. D) Holders of a convertible bond should exercise the conversion option when the...
True or False and why? 1. A call provision gives the issuer the right to all...
True or False and why? 1. A call provision gives the issuer the right to all the bonds for redemption. In general, companies call bonds if interest rates rise and do not call them if interest rates decline. 2. A zero coupon bond is a bond that pays no interest and is offered (and initially sells) at a discount. These bonds provide compensation to investors in the form of capital appreciation.
b. Bonds that have specific assets of the issuer pledged as collateral. Secured bonds C Events...
b. Bonds that have specific assets of the issuer pledged as collateral. Secured bonds C Events with uncertain outcomes that may represent potential liabilities. d. Bonds that can be converted into common stock at the bondholder's option Unsecured bonds e. A legal document that indicates the name of the issuer, the face value of the bonds, and other data such as the contractual interest rate and the maturity date of the bonds. [ Bonds that the issuing company can redeem...
33. A call provision in a bond agreement grants the issuer the right to: A. call...
33. A call provision in a bond agreement grants the issuer the right to: A. call the bondholder to determine if he or she would like to extend the term of the bond agreement. B. change the coupon rate provided the bondholders are notified in advance. C. replace the bonds with equity securities. D. repurchase the bonds prior to maturity at a pre-specified price. E. buy back the bonds on the open market prior to maturity. Part 2 A note...
Which of the following statements is not true? When referring to bonds, expected rate of return...
Which of the following statements is not true? When referring to bonds, expected rate of return and yield to maturity are often used interchangeably. The par value of a corporate bond indicates the payment that the issuer promises to make to the bondholder at maturity. The sum of the present values of an investment's expected future cash flows is known as the investment’s intrinsic value. The restrictive provisions contained in the bond indenture protect the common stockholders. To determine the...
10. A callable corporate bond can be purchased by the bond issuer before maturity for a...
10. A callable corporate bond can be purchased by the bond issuer before maturity for a price specified at the time the bond is issued. Corporation X issues two bonds (bond A and bond B) at the same time with the same maturity, par value, and coupons. However, bond A is callable and bond B is not. Which bond will sell for a higher price and why? (a) Bond B; bond A should have the value of bond B minus...
True of False? 1.A convertible bond is a corporate bond with a call option to buy...
True of False? 1.A convertible bond is a corporate bond with a call option to buy the common stock of the issuer. 2.The value of a corporate bond without the conversion option is called its straight value. 3.The price that an investor effectively pays for the common stock if the convertible bond is purchased and then converted into the common stock is called the Market Conversion Price. 4.The higher the premium over straight value, the less attractive the convertible bond....
6. The feature permits the issuer to repurchase bonds at a stated price prior to maturity....
6. The feature permits the issuer to repurchase bonds at a stated price prior to maturity. A. call D. capitalization 7. The thavalue of a bond is also called its face value. Bonds which sell at less face value are priced at awhile bonds which sell at greater than face value sell at a A. discount; par, premium B. premium; discount; par C par discount; premium D. coupon; premium; discount 8. If you invest $178,571 in a project that generates...
Questions 1 to 10 are false statements. Please re-write each statement so that it is true....
Questions 1 to 10 are false statements. Please re-write each statement so that it is true. It may be as simple as one word change or more complex. 1. A callable bond is one in which the issuer is required to retire a certain amount of the outstanding bonds each year to ensure that all the bond principle is paid by final maturity. 2. There is no default risk with either Treasury bonds or municipal bonds. 3. The dirty price...
SLdtus QUESTION 1 Because short-ter m interest rates are much more volatile than long-term rates, you...
SLdtus QUESTION 1 Because short-ter m interest rates are much more volatile than long-term rates, you would, in the real world, generally be subject to True QUESTION 2 is a multiple of $1,000. The issuer wil make payments of 6% of A 20-year bond with a 6% coupon rate can have a par the par value each year, generally with one-half of the annual amount paid each 6 months. Bonds may include a si that some of the bonds must...
b. Bonds that have specific assets of the issuer pledged as collateral. Secured bonds C Events with uncertain outcomes that may represent potential liabilities. d. Bonds that can be converted into common stock at the bondholder's option Unsecured bonds e. A legal document that indicates the name of the issuer, the face value of the bonds, and other data such as the contractual interest rate and the maturity date of the bonds. [ Bonds that the issuing company can redeem...
10. A callable corporate bond can be purchased by the bond issuer before maturity for a price specified at the time the bond is issued. Corporation X issues two bonds (bond A and bond B) at the same time with the same maturity, par value, and coupons. However, bond A is callable and bond B is not. Which bond will sell for a higher price and why? (a) Bond B; bond A should have the value of bond B minus...
6. The feature permits the issuer to repurchase bonds at a stated price prior to maturity. A. call D. capitalization 7. The thavalue of a bond is also called its face value. Bonds which sell at less face value are priced at awhile bonds which sell at greater than face value sell at a A. discount; par, premium B. premium; discount; par C par discount; premium D. coupon; premium; discount 8. If you invest $178,571 in a project that generates...
SLdtus QUESTION 1 Because short-ter m interest rates are much more volatile than long-term rates, you would, in the real world, generally be subject to True QUESTION 2 is a multiple of $1,000. The issuer wil make payments of 6% of A 20-year bond with a 6% coupon rate can have a par the par value each year, generally with one-half of the annual amount paid each 6 months. Bonds may include a si that some of the bonds must...
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