Fin 313 Business Finance M6.A bond that is payable to whomever has physical poss

Question

Fin 313 Business Finance M6.A bond that is payable to whomever has physical possession of the bond is said to be in A. new-issue condition. B. registered form C. bearer form. D. debenture status E. collateral status. M 7. Which one of the following is the price a dealer will pay to purchase a bond? A. call price B. asked price C. bid price D. bid-ask spread E. par value M 8. A bond is quoted at a price of $989. This price is referred to as which one of the following? A. call price B. face value C. clean price D. dirty price E wholesale price M9. The Fisher effect is defined as the relationship between which of the following variables? A. default risk premium, inflation risk premium, and real rates B. nominal rates, real rates, and interest rate risk premium C. interest rate risk premium, real rates, and default risk premium D. real rates, inflation rates, and nominal rates E. real rates, interest rate risk premium, and nominal rates M 10. All else constant, a bond will sell at when the coupon rate is the yield to maturity. A. a premium; less than B. a premium; equal to C. a discount; less than D. a discount; higher than E. par, less than

Explanation / Answer

Ans 6) A bond that is payable to whomever has physical possession of the bond is said to be in bearer form.

Ans 7) Bid price is the price dealer will pay to purchase a bond at this price seller is agree to sell the bond.

Ans 8) It will be referred as a clean price because it is a price in which any accrued interest and coupon payment is excluded.

Ans 9) The Fisher effect is defined as the relationship between real rates, inflation rates, and nominal rates.

Ans 10) All else constant, a bond will sell at discount when the coupon rate is less than the yield to maturity.

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