Exam 7: Bond Markets

Which of the following statements is not true regarding STRIPS?

Corporate bonds can be placed with investors through a public offering or a private placement.

Inflation-indexed Treasury bonds are intended for investors who wish to ensure that the returns on their investments keep up with the increase in prices over time.

Which of the following is not true regarding the call provision?

A ____ has first claim on specified assets, while a ____ is a debenture that has claims against a firm's assets that are junior to the claims of mortgage bonds and regular debentures.

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 eventoastock index.

Municipal general obligation bonds are ____. Municipal revenue bonds are ____.

If interest rates suddenly decline, those existing bonds that have a call feature are less likely to be called.

For bonds issued under a _______ arrangement, the underwriter guarantees the issuer that the bonds will be sold at a specified price.

____ bonds have the most active secondary market.

Assume U.S. interest rates are significantly higher than German rates. A U.S. firm with a German subsidiary could achieve a lower financing rate without exchange rate risk by denominating thebonds in

Which of the following eurozone countries has not recently experienced debt repayment problems?

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

Which of the following statements is incorrect?

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 coupon rate of most variable-rate bonds is tied to

For bonds issued under a _______ arrangement, the underwriter attempts to sell the bonds at a specified price but makes no guarantee to the issuer.

Which of the following statements is true regarding STRIPS?

Bond dealers do not have an inventory of bonds.

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.