Quizific | Bond Market Quiz

Accrued interest

is quoted in the bond price in the financial press.

must be paid by the buyer of the bond and remitted to the seller of the bond.

must be paid to the broker for the inconvenience of selling bonds between maturity dates.

A and B.

The invoice price of a bond that a buyer would pay is equal to

the asked price plus accrued interest.

the asked price less accrued interest.

the bid price plus accrued interest.

the bid price less accrued interest.

An 8% coupon U. S. Treasury note pays interest on May 30 and November 30 and is traded for settlement on August 15. The accrued interest on the $100,000 face value of this note is _________.

$491.80

$800.00

$983.61

$1,661.20

A coupon bond is reported as having an ask price of 113% of the $1,000 par value in the Wall Street Journal. If the last interest payment was made two months ago and the coupon rate is 12%, the invoice price of the bond will be ____________.

$1,100

$1,110

$1,150

$1,160

The bonds of Ford Motor Company have received a rating of "D" by Moody's. The "D" rating indicates

the bonds are insured

the bonds are junk bonds

the bonds are referred to as "high yield" bonds

B and C

The bond market

can be quite "thin".

primarily consists of a network of bond dealers in the over the counter market.

consists of many investors on any given day.

A and B.

Ceteris paribus, the price and yield on a bond are

positively related.

negatively related.

sometimes positively and sometimes negatively related.

not related.

The ______ is a measure of the average rate of return an investor will earn if the investor buys the bond now and holds until maturity.

current yield

dividend yield

P/E ratio

yield to maturity

The _________ gives the number of shares for which each convertible bond can be exchanged.

conversion ratio

current ratio

P/E ratio

conversion premium

A coupon bond is a bond that _________.

pays interest on a regular basis (typically every six months)

does not pay interest on a regular basis but pays a lump sum at maturity

can always be converted into a specific number of shares of common stock in the issuing company

always sells at par