Exam 7: Bond Markets

____ are not primary purchasers of bonds. ​

Under the STRIP program created by the Treasury, stripped securities are created and sold by the Treasury.

Interest earned from Treasury bonds is ​

The bond debenture is a legal document specifying the rights and obligations of both the issuing firm and the bondholders.

When firms issue ____, the amount of interest and principal to be paid is based on specified market conditions. The amount of the repayment may be tied to a Treasury bond price index or even to a stock index. ​

A corporate restructuring in which the corporation seeks to reduce its debt by issuing stock and using the proceeds to retire its existing bonds is known as a(n)

Assume that one year ago you purchased corporate bonds that have no protective covenants. Today, it is announced that the firm that issued the bonds plans a leveraged buyout. The market value of your bonds will likely ____ as a result.

Treasury bonds are issued by state and local governments.

Stripped bonds are bonds whose cash flows have been transformed into a security representing the principal payment only and a security representing interest payments only.

____ bids for Treasury bonds specify a price that the bidder is willing to pay and a dollar amount of securities to be purchased. ​

Treasury bond auctions are normally conducted only at the beginning of each year.

When a corporation issues bonds, it normally hires a securities firm that targets large institutional investors such as pension funds, bond mutual funds, and insurance companies.

The issuance of municipal securities is regulated by

The key difference between a note and a bond is that note maturities are usually less than one year, while bond maturities are one year or more.

Corporate bonds are sometimes packaged by commercial banks into ___________, in which investors receive the interest or principal payments generated by the debt securities. ​

Bonds that are not secured by specific property are called

Corporate bonds that receive a ____ rating from credit rating agencies are normally placed at ____ yields.

Which of the following institutions is most likely to purchase a private bond placement? ​

Jim purchases $10,000 par value bonds with a 10 percent coupon rate and a 7 percent yield to maturity. Jim will hold the bonds until maturity. Thus, he will earn a return of ____ percent.

In general, variable-rate municipal bonds are desirable to investors who expect that interest rates will ____ __ .