Eurobonds are
A) issued in a country different from the one in whose currency the bond is denominated.
B) issued only in Europe.
C) the European equivalent of a junk bond.
D) none of the above.
Which of the following statements about zero coupon bonds is FALSE?
A) When the bonds mature, the issuing firm is faced with a small cash outflow relative to the cash inflow the firm receives when the bonds are initially issued.
B) Zero coupon bonds have lower interest rate risk than bonds with high coupons.
C) Zero coupon bonds are an extremely popular way for corporations to borrow money.
D) Most zero coupon bonds in the U.S. are government issues.
Which of the following bond types has the greatest risk for investors?
A) Debentures
B) Mortgage bonds
C) Floating rate bonds
D) Subordinated debentures
The holder of a non-amortizing bonds
A) receives no periodic interest payments.
B) receives the full par value of the bond when it matures.
C) receives shares of common stock rather than cash interest payments.
D) receives periodic payments that consist of both interest and principal.
Junk bonds
A) pay little or no interest.
B) are commonly used to finance municipal waste disposal facilities.
C) are issued by the U. S. Treasury Department.
D) have yields that are considerably higher than those of the highest rated bonds.
Debentures are unsecured long-term debt.
Answer: TRUE
Zero coupon bonds are disadvantageous to the issuing firm if interest rates fall.
Answer: TRUE
Eurobonds are bonds issued in a country different from the one in whose currency the bond is denominated.
Answer: TRUE
Convertible bonds can be exchanged for the issuing firm's common stock at a price specified at the time of issue.
Answer: TRUE
