Which One of the Following Statements About Vanilla Bonds Is

question 7

Multiple Choice

Which one of the following statements about vanilla bonds is NOT true?

• A) They have fixed coupon payments.
• B) The face value, or par value, for most corporate bonds is $1,000.
• C) Coupon payments are usually made quarterly.
• D) The bond's coupon rate is calculated as the annual coupon payment divided by the bond's face value.

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Definitions:

Discrete Probability

The probability of an outcome occurring when the set of possible outcomes is countable and each outcome has a distinct probability.

Probability Function

A function, denoted by f(x), that provides the probability that x assumes a particular value for a discrete random variable.

Required Condition

A necessary stipulation or prerequisite that must be met for a particular procedure, operation, or situation to proceed or be considered valid.

Binomial Probability

The probability of achieving a specific number of successes in a fixed number of independent Bernoulli trials, given a certain success probability in each trial.