initial measurement of a bond on its issuance
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Which of the following is not a way on how to determine the initial measurement of a bond on its issuance?
- market quotation
- future value of present cash flows
- issuance price less issuance cost
- present value of future cash flows
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- Which of the following is NOT a defining quality of a standard bond cash flow? a) Coupon b) Maturity c) Perpetuity Cash Flow d) Face ValueHow are financial markets classified according to maturity of the claim?What is the main reason for the yield differences between treasury bond yield and corporate bond yield? a. Credit risk b. Systemic Risk c. Liquidity risk d. Interest rate risk
- What is the effective interest rate of a bond or other debt instrument measured at amortized cost? Select the correct response: The interest rate currently charged by the entity or by others for similar debt instruments (i.e., similar remaining maturity, cash flow pattern, currency, credit risk, collateral, and interest basis). The interest rate that exactly discounts estimated future cash payments or receipts through the expected life of the debt instrument or, when appropriate, a shorter period to the net carrying amount of the instrument. The basic, risk-free interest rate that is derived from observable government bond prices The stated coupon rate of the debt instrument.Which of the following does not impact the calculation ofthe cash interest payments to be made to bondholders?a. Face value of the bond.b. Stated interest rate.c. Market interest rate.d. The length of time between payments.) is a measure of the sensitivity of the price of a bond or other debt instrument to a change in interest rates. O Convexity Maturity Duration Immunization
- What are the differences between stocks and bonds in terms of predicted future payments? Which sort of investment is regarded to be riskier (stocks or bonds)? Given your knowledge, which investment (stocks or bonds) do you believe is often referred to as "fixed income"?Which of the following is NOT an external method of interest rate risk management? * A. Using an interest rate swap B. Using financial futures C. Using an off-balance-sheet strategy, such as a forward rate agreement D. Having fixed-interest assets financed by fixed-interest liabilities and equitya) Explain the difference between the unbiased expectations theory of the term structure of interest rates and the liquidity premium theory.
- What is the relationship between interest rate level and bond price? Why must this relationship be true? How has the current rate environment impacted the prices of bonds?Which of the following is the worst measure of the cost of debt? Estimating Interest Rate based on Synthetic Bond Rating O Estimating Interest Rate based on Actual Bond Rating Current Bank Loan Rate Interest rate of Outstanding Bonds