2. Which of the following statements regarding bondterminologies is INCORRECT?
The written, legally binding agreement between the corporateborrower and
the lender detailing the terms of a bond issue is called theindenture.
B. The unsecured long-term debts of a firm are commonly calleddebentures.
A special account that sets aside periodic payments for bondredemption is
called a sinking fund.
An agreement giving the bond issuer the option to repurchase thebond at a
specified price prior to maturity is called the zero provision.
Which of the following statements regarding bond trading isINCORRECT?
A. The long-term bonds issued by the U.S. government are calledTreasury Bills.
B. The long-term bonds issued by state and local governments in theUnited
States are called municipal bonds.
C. A bond that makes no coupon payments (and thus is initiallypriced at a deep
discount) is called a zero coupon bond.
D. The price a dealer is willing to pay for a security is calledthe bid price.