Bootstrapping Involves

question 15

Multiple Choice

Bootstrapping involves

• A) Calculating the yield on a bond
• B) Working from short maturity instruments to longer maturity instruments determining zero rates at each step
• C) Working from long maturity instruments to shorter maturity instruments determining zero rates at each step
• D) The calculation of par yields

Identify and apply effective communication techniques, including verbal and nonverbal responses.

Recognize and implement the use of positive language to improve message tone.

Distinguish between effective and ineffective sentence structures in business writing.

Evaluate the role of audience analysis and benefits in crafting business messages.

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Definitions:

Unamortized Discount

The portion of a bond's face value that has not yet been expensed as interest over time to reflect the bond being issued below its par value.

Redeemed

The act of paying off or buying back something, such as repaying a bond or exchanging a coupon for goods.

Gain On Redemption

The financial benefit gained when a debt instrument, such as a bond, is redeemed before its maturity at a value higher than its book value.

Discount On Bonds Payable

The difference between the face value of bonds and their selling price when sold for less than their face value.