Say You Are a Dealer Who Needs to Sell Some

question 82

Multiple Choice

Say you are a dealer who needs to sell some of your long-term bonds.You receive a bid-offer quote of 6.25-6.22% from dealer X and of 6.24-6.21% from dealer Y.What quote is the most attractive?

• A)6.25%
• B)6.22%
• C)6.24%
• D)6.21%
• E)Dealers don't sell to other dealers.

---

Definitions:

Market Rate Of Interest

The prevailing interest rate available in the marketplace for investments of similar risk and maturity.

Serial Bonds

A type of bond issue that is structured so that a portion of the bonds matures at different intervals over a period of time, facilitating the gradual repayment of the debt.

Interest Expense

The cost incurred by an entity for borrowed funds, reported on the income statement as part of operating expenses if related to core operations, or as non-operating expenses if it is not.

Bonds Outstanding Method

A technique used to calculate the total amount of bonds that are currently issued and not yet redeemed or paid off by the issuer.