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FUNDAMENTALS OF CORPORATE FINANCE TEST FULLY SOLVED -11
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FUNDAMENTALS OF CORPORATE FINANCE TEST FULLY SOLVED -11
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FUNDAMENTALS OF CORPORATE FINANCE TEST FULLY SOLVED#11
Coupon - correct answer The stated interest payment
Made on a bond
Face value - correct answer The principal amount of a
Bond that is repaid at the
End of the term. Also called
Par value.
Coupon rate - correct answer The annual coupon divided
By the face value of a bond.
(coupon rate = coupon/faсe value)
Maturity - correct answer The specified date on
Which the principal amount
Of a bond is paid.
Yield to maturity
(YTM) - correct answer The rate required in the
Market on a bond.
Bond value - correct answer Present value of the coupons + Present value
Of the face amount
Current yield - correct answer A bond's annual coupon
Divided by its price.
Indenture - correct answer The written agreement
Between the corporation
And the lender detailing the
Terms of the debt issue.
Registered form - correct answer The form of bond issue
In which the registrar of
The company records
Ownership of each bond;
Payment is made directly to
The owner of record
Bearer form - correct answer The form of bond issue in
Which the bond is issued
Without record of the
Owner's name; payment is
Made to whomever holds
, The bond
Debenture - correct answer An unsecured debt, usually
With a maturity of 10 years
Or more.
Note - correct answer An unsecured debt, usually
With a maturity under 10
Years.
Sinking fund - correct answer An account managed by
The bond trustee for early
Bond redemption.
Call provision - correct answer An agreement giving the
Corporation the option
To repurchase a bond at
A specifi ed price prior to
Maturity.
Call premium - correct answer The amount by which the
Call price exceeds the par
Value of a bond.
Deferred call provision - correct answer A call provision prohibiting
The company from
Redeeming a bond prior
To a certain date.
Call-protected bond - correct answer A bond that, during a
Certain period, cannot be
Redeemed by the issuer.
Protective covenant - correct answer A part of the indenture
Limiting certain actions that
Might be taken during the
Term of the loan, usually to
Protect the lender's interest.
Zero coupon bond - correct answer A bond that makes no
Coupon payments and is
Thus initially priced at a
Deep discount.
Bid price - correct answer The price a dealer is willing
To pay for a security.
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