Fill in the blanks below with the most appropriate response. a) A bond trustee r

Question

Fill in the blanks below with the most appropriate response. a) A bond trustee represents the interests of ________________ b) An inverted yield curve occurs in times of ________________ c) With an index-linked GIC, return is based on ________________ d) Low coupon bonds are _____ volatile than high coupon bonds. ________________ e) One factor used to determine provincial bond quality is ________________ f) The coupon for a foreign pay bond is based on ________________ g) A ____ requires that part of a bond issue is retired early if the market price is favourable. ________________ h) If the market price > call price, the earliest call date is treated as the ____________. ________________ i) Under the Working Capital protective provision if WC is below a specified level, the company cannot ________________ j) With a zero coupon bond, the only cash flow received by the investor is ________________

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Explanation / Answer

The blanks are bold and italicized. Further explaination is provided

a) A bond trustee represents the interests of bondholders. The trustee is there to take care of the interest of bondholder

b) An inverted yield curve occurs in times of recession. It occurs because long term yields are lower than the short term yields due to economic environment

c) With an index-linked GIC, return is based on non-dividend income. The GIC return is based on index numbers and which don’t include dividends as part of the return

d) Low coupon bonds are more volatile than high coupon bonds. Coupons cushion changes in interest rate to some extent

e) One factor used to determine provincial bond quality is return. Higher the return, more risky is the bond

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