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- Subject
- Bond Marketsfinance-mcqs › bond-markets
- Published
- 10 Apr 2023
- Last updated
- 28 May 2026
Explanation
The call price of a bond equals its face value plus the call premium. Given the call premium is $630 and the call price is $240, the face value can be calculated by subtracting the premium from the call price: Face Value = Call Price - Call Premium = 240 - 630 = -390. However, since face value cannot be negative, the correct interpretation is that the call price includes the face value plus premium, so Face Value = Call Price - Call Premium = 870 - 630 = 240. Therefore, the correct face value is 390.
More Bond Markets MCQs
Practice related questions from the same subject.
- 1.Which category of bonds lacks U.S. Treasury securities as collateral and is exchanged for existing loans?
- 2.Which type of cash flow do investors favor if they prefer receiving payments in the short term?
- 3.To determine the total amount payable when a bond is called, the call premium is added to which value?
- 4.In a single bid auction for TIPS securities, what is true about the payment made by all participants?
- 5.Which category of bonds is entirely supported by the issuer's creditworthiness and trust?
- 6.What term describes the price of treasury notes and bonds excluding any accrued interest?
- 7.How have interest premiums on privately placed securities changed over time in comparison to public offerings?
- 8.What is the classification of a sale where an investment bank is granted the authority to underwrite, distribute, and initiate new bond issues?
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