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Finance
Week 5 - Bonds
| Question | Answer |
|---|---|
| Bonds are ____than stocks | safer |
| Bonds provide a ______ stable cash flow stream (fixed income) | predictable |
| Bonds provide ______ for the investor's portfolio | diversification |
| Bond investors (a.k.a. bondholders) | may be institutional or retail investors |
| Are typically corporations, governments (federal, state, or local) and government agencies. | Bond issuers |
| The amount the issuer will pay back to bondholders when the bond matures at the end of its term | face value (a.k.a., "par value" or just "par"): t |
| When the bondholder will be paid back in full | Maturity date |
| Bonds are ____than stocks | safer |
| Bonds provide a ______ stable cash flow stream (fixed income) | predictable |
| Bonds provide ______ for the investor's portfolio | diversification |
| Bond investors (a.k.a. bondholders) | may be institutional or retail investors |
| Are typically corporations, governments (federal, state, or local) and government agencies. | Bond issuers |
| The amount and time schedule of interest payments | Coupon rate and coupon dates: |
| The ______ of the bond is determined by the market, backed by the discounted value of the cash flows (coupon payments and principal repayment) bondholders expect to receive from the bond. | price |
| The amount the issuer will pay back to bondholders when the bond matures at the end of its term | face value (a.k.a., "par value" or just "par"): t |
| When the bondholder will be paid back in full | Maturity date |
| The amount and time schedule of interest payments | Coupon rate and coupon dates: |
| The ______ of the bond is determined by the market, backed by the discounted value of the cash flows (coupon payments and principal repayment) bondholders expect to receive from the bond. | price |
| Bonds that do not pay any coupons (periodic interest payments) | Zero-coupon bonds |
| Bonds that pay regular coupons (periodic interest payments) during their life. | Coupon bonds |
| Bond market securities can be ________ or zero-coupon bonds | coupon |
| The money market (short-term) | Market for bonds with short-term maturities (one year or less). |
| Because ______ are long-term securities, they tend to be riskier than money market securities. | bond market securities |
| All money market securities are __________ | zero-coupon bonds. |
| Primary money market instruments | U.S. Treasury Bills, Commercial Paper, and Repurchase agreements |
| Because _______ they tend to be low risk and the money market is very liquid. | Money market bonds |
| Primary bond market securities | U.S. Treasury Notes, Corporate bonds, Municipal bonds (Munis), Asset-backed and Mortgage-backed securities, Federal agency securities |
| The bond market (long-term): | Market for bonds with long-term maturities (more than one year). |
| The bond and equity markets are together referred to as the | capital markets |
| Bond market securities can be ________ or zero-coupon bonds | coupon |
| Bonds issued by state and local governments, as well as entities that serve a public purpose, such as universities, hospitals, and utilities are called | municipal bonds |
| Because ______ are long-term securities, they tend to be riskier than money market securities. | bond market securities |
| Zero-coupon bonds can be created artificially via a process called | stripping |
| Which of the following bond issuer(s) regularly issue zero-coupon bonds with long maturities (more than 1 year) ? Select all that apply. | Municipalities and financial firms |
| Primary money market instruments | U.S. Treasury Bills, Commercial Paper, and Repurchase agreements |
| Primary bond market securities | U.S. Treasury Notes, Corporate bonds, Municipal bonds (Munis), Asset-backed and Mortgage-backed securities, Federal agency securities |
| The bond and equity markets are together referred to as the | capital markets |
| Bonds issued by state and local governments, as well as entities that serve a public purpose, such as universities, hospitals, and utilities are called | municipal bonds |
| Zero-coupon bonds can be created artificially via a process called | stripping |
| Which of the following bond issuer(s) regularly issue zero-coupon bonds with long maturities (more than 1 year) ? Select all that apply. | Municipalities and financial firms |
| Which type of coupon bond is the most common? | semi-annual |
| a type of treasuries that are one year or less maturity and are zero-coupon | T-bill |
| a type of treasuries that are 2-10 years of maturity and are coupons | T-note |
| A type of treasuries that are more than 10 years of maturity and are coupons | T-bond |
Created by:
tommy000