University:
California State University, San Marcos
Course:
MGMT 452 | Leadership in Organizations
Academic year:

2021
Views:

53

Pages:

2
Author:

Alma Stephenson

The primary purpose of protective covenants is to help: protect bondholders from issuer actions. The primary purpose of bond covenants is to: protect the bondholders. A bond has a make-whole call provision. Given this, you know that the: call price is inversely related to the market rate of interest. A callable bond: may be structured to pay bondholders the current value of the bond on the date of call. Which one of the following statements concerning sinking funds is correct? Sinking funds may be used to purchase bonds in the open market. The purpose of a bond sinking fund is to: repay bonds early either through purchases or calls. A debenture is: an unsecured bond. Which one of the following might be included in a bond's list of negative covenants? Limit cash dividends to $1 per share or less A bond's indenture agreement generally includes all of the following except the: names of registered shareholders. Which statement is true? An indenture is a contract between a bond's issuer and its holders. Of these choices, a risk-adverse investor who prefers to minimize interest rate risk is most apt to invest in: 2-year, 7 percent coupon bonds. An unexpected decrease in market interest rates will cause a: coupon bond's yield to maturity to decrease. Which one of the following bonds is the most sensitive to changes in market interest rates? 10-year, zero coupon All else held constant, the present value of a bond increases when the: yield to maturity decreases. Which one of the following statements is true? A discount bond has a coupon rate that is less than the bond's yield to maturity. The yield to maturity on a discount bond is: greater than both the current yield and the coupon rate. When a bond's yield to maturity is less than the bond's coupon rate, the bond: is selling at a premium. Which one of the following provides compensation to a bondholder when a bond is not readily marketable at its full value? Liquidity premium Which one of the following premiums is paid on a corporate bond due to its tax status? Taxability premium Which one of the following represents additional compensation provided to bondholders to offset the possibility that the bond issuer might not pay the interest and/or principal payments as expected? Default risk premium