Reference no: EM13806172
1. Which of the following statements regarding bond terminologies is INCORRECT?
A. The written, legally binding agreement between the corporate borrower and the lender detailing the terms of a bond issue is called the indenture.
B. The unsecured long-term debts of a firm are commonly called debentures.
C. A special account that sets aside periodic payments for bond redemption is called a sinking fund.
D. An agreement giving the bond issuer the option to repurchase the bond at a specified price prior to maturity is called the zero provision.
2. Which of the following statements regarding bond trading is INCORRECT?
A. The long-term bonds issued by the U.S. government are called Treasury Bills.
B. The long-term bonds issued by state and local governments in the United States are called municipal bonds.
C. A bond that makes no coupon payments (and thus is initially priced at a deep discount) is called a zero coupon bond.
D. The price a dealer is willing to pay for a security is called the bid price.
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