Practice Question Set: Corporate Bonds

Chapter 17. Corporate Bonds Practice Question set contains 24 pages covering the following learning objectives:

* Describe features of bond trading, and explain the behavior of bond yield.

* Describe a bond indenture and explain the role of the corporate trustee in a bond indenture.

* Define high-yield bonds, and describe types of high-yield bond issuers and some of the payment features unique to high yield bonds.

* Differentiate between credit default risk and credit spread risk.

* Describe event risk and explain what may cause it in corporate bonds.

* Describe the different classifications of bonds characterized by issuer, maturity, interest rate, and collateral.

* Describe the mechanisms by which corporate bonds can be retired before maturity.

* Define recovery rate and default rate, differentiate between an issue default rate and a dollar default rate, and describe the relationship between recovery rates and seniority.

* Evaluate the expected return from a bond investment and identify the components of the bond’s expected return.

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