Quiz Ch 06 – T/F Current Yield and Total Rate of Return
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
True or false: The bond’s overall rate of return is assessed by the current yield.
True or false: The bond’s overall rate of return is assessed by the current yield.
True or false: Default risk is a concern with speculative-grade bonds but NOT with investment-grade bonds.
True or false: Interpreting an asking price of 100.127 and a bid price of 100.143 would be reasonable.
True or false: Investment-grade bonds are those with a Standard & Poor’s rating of BBB or higher.
True or false: Investors could have logical reasons to avoid long-term bonds, even if the yield curve slopes upward.
True or false: Issuers address default risk with higher bond face values.
True or false: Bond ratings assess the credit risk associated with a bond.
True or false: A bond’s current yield would typically be of greater interest to a long-term investor than its yield to maturity.
True or false: Bonds with a Moody’s Ba rating are on par in terms of safety with bonds rated BB by Standard & Poor’s.
True or false: Bonds receiving a Moody’s rating of Ba or lower are commonly labeled as speculative grade, high-yield, or junk bonds.