Question
How does an underwritten bond offering differ from a best-efforts offering in who bears sale risk?
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Answer
The underwriter bears it in underwritten offerings; the issuer bears it in best-efforts.
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Question
What does the fundamental bond pricing equation say a bond's price equals?
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Answer
The present value of future coupons and par value.
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Question
What is yield-to-maturity in bond valuation?
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Answer
The single discount rate equating cash flows to current price.
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Question
Why do fixed-income indexes have higher turnover than equity indexes?
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Answer
Bonds mature, so issues must be removed and replaced constantly.
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