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Ch $07-$ Assignment $-$ Bonds and Their Valuation

$2.$ Characteristics of bonds

To be effective issuing and investing in bonds, knowledge of their terminologk, characteristics, and features is essential.

For example:

A bond's $$ Is generally $$1,000$ and represents the amount borrowed from the bonds frits purchasec

A bond hisiotr is said to be ir $q,$ If it does not puy the interest or the principal in accordance wth the terms of the inf agreement or if if violates one or more of the issur's restrictive covenants.

$*$The contract that describes the terms of a borrowing arrangement between a firm that sells a bond issuet and the invertors who pur$)$ is called $q,.$ gives the istuer the right to call, or redeem, a bond at apecific times and under speonic consf

Suppose you read an article about the Golden Gate Bridge and Mighway Dittrict bonds. It inclutes the following information:

$$

Pridge Bonds Series A Dated $7-15-20054\mathrm{.}375\%$ Due $7-15-2055$ e$100\mathrm{.}00$

$q,$

What is the coupon interest rate of this bond?

$4\mathrm{.}375\%$

$0\mathrm{.}475\%$

It the coupon interest rate remaiss constant from the time of lasue until the bond matures, then the bond is caled a