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1、1 Copyright 2014 Pearson Education, Inc. Corporate Finance, 3e (Berk/DeMarzo) Chapter 6 Valuing Bonds 6.1 Bond Cash Flows, Prices, and Yields 1) Which of the following statements is FALSE? A) Bonds are a securities sold by governments and corporations to raise money from investors today in exchange
2、for promised future payments. B) By convention the coupon rate is expressed as an effective annual rate. C) Bonds typically make two types of payments to their holders. D) The time remaining until the repayment date is known as the term of the bond. Answer: B Diff: 1 Section: 6.1 Bond Cash Flows, Pr
3、ices, and Yields Skill: Definition 2) Which of the following statements is FALSE? A) The principal or face value of a bond is the notional amount we use to compute the interest payments. B) Payments are made on bonds until a final repayment date, called the term date of the bond. C) The coupon rate
4、of a bond is set by the issuer and stated on the bond certificate. D) The promised interest payments of a bond are called coupons. Answer: B Diff: 1 Section: 6.1 Bond Cash Flows, Prices, and Yields Skill: Definition 3) Which of the following statements is FALSE? A) The bond certificate typically spe
5、cifies that the coupons will be paid periodically until the maturity date of the bond. B) The bond certificate indicates the amounts and dates of all payments to be made. C) The only cash payments the investor will receive from a zero coupon bond are the interest payments that are paid up until the
6、maturity date. D) Usually the face value of a bond is repaid at maturity. Answer: C Diff: 1 Section: 6.1 Bond Cash Flows, Prices, and Yields Skill: Definition 2 Copyright 2014 Pearson Education, Inc. 4) Which of the following statements is FALSE? A) The amount of each coupon payment is determined by
7、 the coupon rate of the bond. B) Prior to its maturity date, the price of a zero-coupon bond is always greater than its face value. C) The simplest type of bond is a zero-coupon bond. D) Treasury bills are U.S. government bonds with a maturity of up to one year. Answer: B Diff: 2 Section: 6.1 Bond C
8、ash Flows, Prices, and Yields Skill: Conceptual 5) Which of the following statements is FALSE? A) Bond traders typically quote bond prices rather than bond yields . B) Treasury bills are zero-coupon bonds. C) Zero-coupon bonds always trade at a discount. D) The yield to maturity is typically stated
9、as an annual rate by multiplying the calculated YTM by the number of coupon payment per year, thereby converting it to an APR. Answer: A Diff: 2 Section: 6.1 Bond Cash Flows, Prices, and Yields Skill: Conceptual 6) Which of the following formulas is incorrect? A) Yield to maturity for an n-period ze
10、ro-coupon bond = B) Price of an n-period bond = + + . + C) Price of an n-period bond = Coupon + D) Coupon = Answer: A Diff: 2 Section: 6.1 Bond Cash Flows, Prices, and Yields Skill: Conceptual 7) Which of the following statements is FALSE? A) One advantage of quoting the yield to maturity rather tha
11、n the price is that the yield is independent of the face value of the bond. B) Unlike the case of bonds that pay coupons, for zero-coupon bonds, there is no simple formula to solve for the yield to maturity directly. C) Because we can convert any bond price into a yield, and vice versa, bond prices
12、and yields are often used interchangeably. D) The IRR of an investment in a bond is given a special name, the yield to maturity (YTM). Answer: B Diff: 2 Section: 6.1 Bond Cash Flows, Prices, and Yields Skill: Conceptual 3 Copyright 2014 Pearson Education, Inc. 8) Which of the following statements is
13、 FALSE? A) The IRR of an investment in a zero-coupon bond is the rate of return that investors will earn on their money if they buy a default free bond at its current price and hold it to maturity. B) The yield to maturity of a bond is the discount rate that sets the future value of the promised bon
14、d payments equal to the current market price of the bond. C) Financial professionals also use the term spot interest rates to refer to the default-free zero- coupon yields. D) When we calculate a bonds yield to maturity by solving the formula, Price of an n-period bond = + + . + , the yield we compu
15、te will be a rate per coupon interval. Answer: B Diff: 2 Section: 6.1 Bond Cash Flows, Prices, and Yields Skill: Conceptual 9) Which of the following statements is FALSE? A) Zero-coupon bonds are also called pure discount bonds. B) The IRR of an investment opportunity is the discount rate at which t
16、he NPV of the investment opportunity is equal to zero. C) The yield to maturity for a zero-coupon bond is the return you will earn as an investor from holding the bond to maturity and receiving the promised face value payment. D) When prices are quoted in the bond market, they are conventionally quoted in increments of $1000. Answer: D Diff: 2 Section: 6.1 Bond Cash Flows, Prices, and Yields Skill: Definition Use the following information to answer the question(s) below. Suppose t
