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Literature Quiz - Chapter 10

Quiz by Daphne

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10 questions
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  • Q1
    An investor purchases a corporate bond with principal value of € 10,000. Time to maturity is 10 years and the annual coupon payments are € 400. The current market interest rate is 2%.
    The bond is traded at par
    The bond is traded at a discount
    The bond is traded at premium
    60s
  • Q2
    The holder of a zero coupon bond receives only one coupon payment, at the end of maturity.
    False
    True
    30s
  • Q3
    Zero-coupon Treasury securities with maturities longer than one year also trade in the bond market are called STRIPS
    True
    False
    30s
  • Q4
    Pure discount bonds are also called zero bonds.
    False
    True
    30s
  • Q5
    Eurobonds are denominated in Euros.
    False
    True
    30s
  • Q6
    A bond rated BBB and above by Standards&Poor, Baa and above by Moody's or unrated
    Speculative grade
    Junk bond
    Investment grade bond
    30s
  • Q7
    A negative relation exists between bond prices and bond yields.
    False
    True
    30s
  • Q8
    Credit spreads are higher for bonds with greater default risk.
    False
    True
    30s
  • Q9
    Credit spreads are higher for bonds with high ratings.
    False
    True
    30s
  • Q10
    An investor purchases a corporate bond with principal value of € 100. Time to maturity is 2 years and the annual coupon payments are € 5.75. The current market interest rate is 2%. The bond has a triple C credit rating. The bond is investment grade and therefore classed as a Junk bond.
    False
    True
    60s

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