Finance is part of Accounting and Finance and holds 1,041 questions with answers, free to read and with no account needed.
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Answer: A. term bonds
Term bonds are structured so that the entire principal amount of the issue matures on a single specified date. Issuing a single maturity date allows corporate treasurers to plan large bullet repayments far in advance. Un...
Answer: D. Par value
The face value or principal amount that a corporation promises to repay at maturity is known as the bond par value. This baseline figure serves as the foundation for calculating all periodic coupon interest payments. Whe...
Answer: D. registered bonds
Registered bonds maintain ownership records directly with the issuing firm, ensuring interest is paid to the verified holder. The issuing corporation or its designated trustee tracks the exact identity of every single re...
Answer: D. Average risk stock
A beta coefficient equal to one indicates that a stock price moves in tandem with the market. Stocks with this exact risk profile experience volatility matching the broader market index benchmark. Financial analysts cate...
Answer: D. Both A and B
Treasury bonds face interest rate risk because market yields fluctuate inversely with bond prices. Reinvestment risk occurs when coupon payments are reinvested at lower prevailing market interest rates. Both auxiliary ma...
Answer: B. Linear
Under standard capital asset pricing models, the theoretical correlation linking expected return with portfolio risk is linear. The security market line demonstrates this direct proportional relationship between systemat...
Answer: A. Homemade leverage
Homemade leverage is an investor borrowing on personal account to reproduce, or to undo, the leverage of the firm whose shares they hold. It is the mechanism behind the Modigliani-Miller argument that capital structure c...
Answer: C. Foreign bonds
Bonds issued by foreign governments, municipalities, or international corporations are categorized as foreign bonds. These instruments are sold in domestic capital markets and denominated in the currency of the host nati...
Answer: D. call provision
A call provision grants the issuing corporation the legal right to repurchase bonds from investors before their maturity date. Issuers typically exercise this provision by paying a call premium that sits safely above the...
Answer: C. general obligation bonds
General obligation bonds are municipal securities backed by the full faith and credit of the issuer. Issuing governments pledge their complete taxing power to ensure timely principal and interest repayment. This supreme...
Answer: A. 1963
The international Eurobond market officially began operations in the calendar year 1963. A landmark fifteen million dollar issue for Autostrade launched the modern cross-border market. S.G. Warburg managed the pioneering...
Answer: C. Zero coupon bond
Zero coupon bonds do not make periodic interest payments and are sold at deep discounts. Investors receive capital appreciation when the bond matures and pays the full face value amount. The difference between the discou...
Answer: A. Income bond
An income bond is a specialized debt instrument where the issuer is only obligated to pay interest if it generates sufficient earnings. If the issuing corporation fails to earn enough profits, the missed interest payment...
Answer: C. Money market securities
Financial instruments and debt securities that mature in under one year are classified as money market securities. Their short term nature ensures high liquidity and minimal default risk for institutional cash managers....
Answer: A. highly risky and higher yields
Subordinated bonds rank behind senior debt during corporate liquidation, making them riskier and necessitating higher yields. Investors demand higher yields to compensate for the elevated probability of absorbing losses...
