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LOS b, (Part 2): Describe the various coupon rate structures.
Q1. Which of the following statements regarding zero-coupon bonds and spot interest rates is most accurate?
A) Price appreciation creates only some of the zero-coupon bond's return.
B) Spot interest rates will never vary across time.
C) A coupon bond can be viewed as a collection of zero-coupon bonds.
Q2. Which of the following statements regarding spot rates and zero-coupon bonds is least accurate?
A) With zero coupon bonds, investors have no reinvestment risk.
B) The yield to maturity on a zero coupon bond is called the spot interest rate.
C) The graph of current corporate bond yields is called the spot yield curve.
Q3. Which of the following statements regarding zero-coupon bonds and spot interest rates is TRUE?
A) Price appreciation creates all of the zero-coupon bond's return.
B) If the yield to maturity on a 2-year zero coupon bond is 6%, then the 2-year spot rate is 3%.
C) Spot interest rates will never vary across the term structure.
Q4. Which of the following statements regarding zero-coupon bonds is TRUE?
A) Zero-coupon bonds have substantial amount of coupon reinvestment risk.
B) An investor who holds a zero-coupon bond until maturity will receive a return equal to the bond's effective annual yield.
C) An investor who holds a zero-coupon bond until maturity will receive an annuity of coupon payments plus recovery of principal at maturity.
Q5. A coupon bond:
A) does not pay interest on a regular basis, but pays a lump sum at maturity.
B) pays interest on a regular basis (typically semi-annually).
C) always sells at par.
Q6. Which of the following statements about zero-coupon bonds is FALSE?
A) A zero coupon bond may sell at a premium to par when interest rates decline.
B) The lower the price, the greater the return for a given maturity.
C) All interest is earned at maturity.
Q7. Which of the following statements concerning coupon rate structures is least accurate?
A) Accrual bonds, like zero-coupon bonds, always sell at a discount to face value.
B) Accrual bonds have only one cash inflow at maturity.
C) Zero-coupon bonds have only one cash inflow at maturity.
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发表于 2009-3-2 14:57
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