Question 5-1
Define each of the following term:
A. Bond; Treasury bond;
corporate bond; municipal bond; foreign bond.
B. Par value; maturity
date; coupon payment; coupon interest rate.
C. Floating-rate bond;
zero coupon bond; original issue discount bond (oid).
D. Call provision;
redeemable bond; sinking fund.
E. Convertible bond;
warrant; income bond; indexed, or purchasing power, bond.
F. premium bond;
discount bond.
G. current yield (on a
bond); yield to maturity (YTM); yield to call (YTC).
H. indentures; mortgage
bond; debenture; subordinated debenture.
I. development bond;
municipal bond insurance; junk bond; investment-grade bond.
J. real risk-free rate
of interest, r*; nominal risk-free rate of interest, rRF
K. inflation premium
(IP); default risk premium (DRP); liquidity; liquidity premium (LP)
L. interest rate risk;
maturity risk premium (MRP); reinvestment rate risk.
M. term structure of
interest rates; yield curve.
N. “normal”
yield curve; inverted (“abnormal”) yield curve.
BA/350 Week 6 Question 5.1
BA350 Week 6 Question 5.1
BA 350 Week 6 Question 5.1
