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QUIZ
1. Marketability risk of bond is
   a. The market risk which affects all
      the bonds
   b. Variation in return caused by
      difficulty in selling bonds
   c. The failure to pay the agreed value
      of the bond by the issuer
   d. a and b


2. Default risk is lower in
   a. Treasury bills
   b. Government bonds
   c. ICICI bonds
   d. Idbi bonds
3. The value of bond depends on
   a. Coupon rate
   b. Years to maturity
   c. Expected yield to maturity
   d. All the above


4. The bond yield remains constant over
   its life and the discount or premium
   amount will decrease
   a. At an decreasing rate as its life gets
        shorter
   b. At an decreasing rate as its life gets
        longer
   c. At an increasing rate as its life gets
        shorter
   d. At an increasing rate as its life gets
        longer
5. Yield to maturity is the single factor
   that makes
   a. The future value of the present
       cash flows from a bond equal to
       bond value
   b. The future value of the present
       cashflows equal to the future price
       of bond
   c. Present value of the future
       cashflows of the bond equal to the
       current price of the bond
   d. The future value of the bond equal
       to the present price


6. The term structure of the bond is the
   relationship between the
a. Interest rate and bond’s maturity
      period
   b. Interest rate of the bond and
      market rate of interest
   c. Interest rate and price of bond
   d. Yield and time taken to mature


7. Riding the yield curve means
   a. Switching over from short term
      bonds to long term bonds when
      the latter yields better
   b. Switching from bonds to stocks
   c. Switching over from long term
      bonds to short term bonds to get
      more yield
d. Switching over to short term bonds
      from long term bonds when yield
      curve is downward sloping


8. Coupon yield of the bond is
   a. The discounted value of bond
   b. Coupon payment stated as a
      percentage of bonds features
   c. Coupon payment stated as a
      percentage of bond’s present price
   d. A and c


9. The bond portfolio manager has to
   watch carefully
   a. The shape of the yield curve
   b. The market interest rate
c. The shape of the yield curve and
      shifts that occur in the market
      interest rate
   d. The repaying capacity of the issuers


10. Duration is the measure of
    a. Time structure of the bond
    b. Interest rate risk
    c. Time structure and market risk
    d. Time structure and interest rate
       risk

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Bond Quiz: Key Terms and Concepts

  • 1. QUIZ 1. Marketability risk of bond is a. The market risk which affects all the bonds b. Variation in return caused by difficulty in selling bonds c. The failure to pay the agreed value of the bond by the issuer d. a and b 2. Default risk is lower in a. Treasury bills b. Government bonds c. ICICI bonds d. Idbi bonds
  • 2. 3. The value of bond depends on a. Coupon rate b. Years to maturity c. Expected yield to maturity d. All the above 4. The bond yield remains constant over its life and the discount or premium amount will decrease a. At an decreasing rate as its life gets shorter b. At an decreasing rate as its life gets longer c. At an increasing rate as its life gets shorter d. At an increasing rate as its life gets longer
  • 3. 5. Yield to maturity is the single factor that makes a. The future value of the present cash flows from a bond equal to bond value b. The future value of the present cashflows equal to the future price of bond c. Present value of the future cashflows of the bond equal to the current price of the bond d. The future value of the bond equal to the present price 6. The term structure of the bond is the relationship between the
  • 4. a. Interest rate and bond’s maturity period b. Interest rate of the bond and market rate of interest c. Interest rate and price of bond d. Yield and time taken to mature 7. Riding the yield curve means a. Switching over from short term bonds to long term bonds when the latter yields better b. Switching from bonds to stocks c. Switching over from long term bonds to short term bonds to get more yield
  • 5. d. Switching over to short term bonds from long term bonds when yield curve is downward sloping 8. Coupon yield of the bond is a. The discounted value of bond b. Coupon payment stated as a percentage of bonds features c. Coupon payment stated as a percentage of bond’s present price d. A and c 9. The bond portfolio manager has to watch carefully a. The shape of the yield curve b. The market interest rate
  • 6. c. The shape of the yield curve and shifts that occur in the market interest rate d. The repaying capacity of the issuers 10. Duration is the measure of a. Time structure of the bond b. Interest rate risk c. Time structure and market risk d. Time structure and interest rate risk