Quiz Ch 06 – Fixed Attribute Over the Life of a Bond
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
Which element remains constant for the duration of a specific bond’s life?
Which element remains constant for the duration of a specific bond’s life?
What is the primary objective of issuing a floating-rate bond?
What is the likely outcome in the future if the bond is presently trading at par value, and the yield on the bond falls below the coupon rate?
If interest rates suddenly rise by 2%, what is the more likely outcome when an investor holds two bonds, one with 5 years until maturity and the other with 20 years until maturity?
If market interest rates shift from 9% to 10%, what occurs to the coupon rate of a $1,000 face value bond that pays $80 annually in interest?
What is the likely result for the price of a bond when an investor buys it with a current yield greater than the coupon rate?
What does it signify when a bond is priced at par value?
If the yield curve has an upward-sloping shape, what are the likely outcomes?
What changes should you anticipate when holding a TIPS during an inflationary period?
Which is most likely to demonstrate a higher level of interest rate risk?