Finance Exam 2

A protective covenant limits the actions of the borrower.
Which one of the following terms refers to a bond’s rate of return that is required by the market place Yield to maturity
When you refer to a bond’s coupon, you are referring to which one of the following? Annual interest payment
When a bond’s yield to maturity is less than the bond’s coupon rate, the bond: is selling at a premium.
The written agreement that contains the specific details related to a bond issue is called the bond: indenture.
Which one of the following terms applies to a bond that initially sells at a deep discount and pays no interest payments? Zero coupon
Municipal bonds: pay interest that is federally tax-free.
What is the principal amount of a bond that is repaid at the end of the loan term called? Face value
Miller Farm Products is issuing a 15-year, unsecured bond. Based on this information, you know that this debt can be described as a: debenture.
Generally speaking, bonds issued in the U.S. pay interest on a(n) _____ basis. semi-annual
This morning, Jeff found a bond certificate lying on the floor of a bank. He picked it up and noticed that the bond matured today. He presented the bond to the bank teller and received both the principal and interest payment. The bond that Jeff found must have been which one of the following? Bearer form bond

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