Exercise
Answer true or false.
1. True or false. A bond’s coupon rate depends on the creditworthiness of its issuer.
2. True or false. A ratings agency is hired by a potential investor, a transfer agent, or a broker/dealer to assess the creditworthiness of a bond issue.
3. True or false. Bearer bonds are registered to a specific owner—the bearer—making them undesirable to tax cheats.
4. True or false. When book-entry bonds are held in street name, the beneficial owner is the broker-dealer.
5. True or false. If two bonds are comparable, but one has a call feature and the other has a put feature, the bond with the call feature will probably have a higher coupon rate.
Answers
1. True.