Posted by: nepali_kancha February 3, 2006
MBA expert question.
Login in to Rate this Post:     0       ?        
Sombody help me on thisl please, 1. Bonds are referred to as non-amortizable debt, which means: a. interest is paid regularly during the term, usually semiannually whereas repayments of principal are annual b. interest is paid regularly during the term, usually semiannually, and repayments of principal are semiannual c. interest is paid regularly during the term, usually semiannually, whereas repayment of principal does not occur until the maturity date d. interest and principal are paid regularly during the term, usually annually 2. Which of the following risks do debt ratings specifically measure? a. Interest Rate Risk b. Maturity Risk c. Default Risk d. Both b & c e. All of the above 3. A call provision: a. Is exercised when interest rates are falling b. Increases risk to the bondholder c. Can be exercised any time after a bond is issued d. Both a & b e. All of the above 4. Although the maturity value of a bond is fixed, changes in current interest rates will: a. influence the amount of the semiannual coupon payment b. affect the bond's yield c. inversely affect the market price of the bond d. b and c 5. If current interest rates are higher than a bond's coupon rate, owners can: a. hold the bond until maturity, at which point its market value will equal its face value b. sell the bond at a premium, because investors are sensitive to price changes in bonds caused by increased interest rates c. sell the bond at a discount, because investors recognize that the lower the bond's price the higher is its yield d. a and c 6. Which of the following events tend to make it less likely that a company will call a bond? a. A reduction in forecast inflation rates. b. The company's bonds are downgraded by Moody's rating service. c. A significant lawsuit is filed against the company. d. Answers a. and b. are correct. e. Answers b. and c. are correct.
Read Full Discussion Thread for this article