Question 1

If the current yield for a $1,000 corporate bond is 8 percent and it has a current market value of $900,then what is the annual income generated by the investment?

Accepted Answer

A) $10 
B) $72 
C) $80 
D) $90 
E) $100 
A) $10 
B) $72 
C) $80 
D) $90 
E) $100 B

Question 2

For government bonds,the difference between the bid price and the ask price is called the:

Accepted Answer

A) dirty price. 
B) asked price. 
C) spread. 
D) clean price. 
E) quoted price. 
A) dirty price. 
B) asked price. 
C) spread. 
D) clean price. 
E) quoted price. C

Question 3

Nancy Groom owns a $1,000 corporate bond that pays 6 percent.What is the dollar amount of each semiannual interest payment?

Accepted Answer

A) $3.00 
B) $30.00 
C) $60.00 
D) $300.00 
E) $600.00 
A) $3.00 
B) $30.00 
C) $60.00 
D) $300.00 
E) $600.00 B

Question 4

Which one of the following is issued by state and local governments?

Accepted Answer

A) Treasury bond 
B) Treasury bill 
C) Municipal bond 
D) Corporate bond 
E) Common stock 
A) Treasury bond 
B) Treasury bill 
C) Municipal bond 
D) Corporate bond 
E) Common stock

Question 5

A legal debt convertible to shares of common stock at the investor's option is called a(n)________.

Accepted Answer

A) debenture bond 
B) mortgage bond 
C) indenture note 
D) convertible corporate note 
E) convertible bond 
A) debenture bond 
B) mortgage bond 
C) indenture note 
D) convertible corporate note 
E) convertible bond

Question 6

________ are bonds of a single issue that mature on different dates.

Accepted Answer

A) Convertible bonds 
B) High-yield bonds 
C) Mortgage bonds 
D) Serial bonds 
E) Debenture bonds 
A) Convertible bonds 
B) High-yield bonds 
C) Mortgage bonds 
D) Serial bonds 
E) Debenture bonds

Question 7

If a bond is quoted in the newspaper at 96,the current price of a $1,000 face value bond is:

Accepted Answer

A) $9.60. 
B) $96.00. 
C) $960.00. 
D) $1,000.00. 
E) $1,096.00. 
A) $9.60. 
B) $96.00. 
C) $960.00. 
D) $1,000.00. 
E) $1,096.00.

Question 8

Mary Smith would like to invest in 10 T-bills that will have a maturity value of $1,000.The bills have a stated interest rate of 2 percent.What would be the purchase price of these T-bills?

Accepted Answer

A) $960 
B) $970 
C) $980 
D) $990 
E) $1,000 
A) $960 
B) $970 
C) $980 
D) $990 
E) $1,000

Question 9

What are the three ways to make money with a bond investment?

Accepted Answer

1.Interest income 
2

Question 10

Usually,interest on corporate bonds is paid to the bondholder every:

Accepted Answer

A) month. 
B) three months. 
C) six months. 
D) nine months. 
E) year. 
A) month. 
B) three months. 
C) six months. 
D) nine months. 
E) year.

Question 11

Which of the following are owned by a company and can be used to secure a mortgage bond?

Accepted Answer

A) Dividends 
B) Bond indentures 
C) Liabilities 
D) Interest payments 
E) Assets 
A) Dividends 
B) Bond indentures 
C) Liabilities 
D) Interest payments 
E) Assets

Question 12

June Tavia is trying to calculate the taxable equivalent yield for a municipal bond.If the bond she owns pays 5 percent interest and she is in the 22 percent tax bracket,what is the taxable-equivalent yield (round to nearest percent)?

Accepted Answer

A) 4 percent 
B) 5 percent 
C) 6 percent 
D) 7 percent 
E) 8 percent 
A) 4 percent 
B) 5 percent 
C) 6 percent 
D) 7 percent 
E) 8 percent

Question 13

The commissions for purchasing bonds:

Accepted Answer

A) are stated in plain language as with stocks. 
B) are a stated dollar amount for each bond you buy. 
C) may be a combination of a stated dollar amount plus an additional commission. 
D) include a markdown when buying. 
E) include a markup when selling. 
A) are stated in plain language as with stocks. 
B) are a stated dollar amount for each bond you buy. 
C) may be a combination of a stated dollar amount plus an additional commission. 
D) include a markdown when buying. 
E) include a markup when selling.

Question 14

To ensure that it has sufficient funds available to redeem a bond issue,a corporation may issue ________ bonds.

Accepted Answer

A) debenture 
B) mortgage 
C) high-yield 
D) subordinate 
E) serial 
A) debenture 
B) mortgage 
C) high-yield 
D) subordinate 
E) serial

Question 15

The only way an investor can make money on a bond investment is to hold the bond until maturity.

Accepted Answer

A) True 
 B)False

Question 16

In the U.S.,bond price quotations are based on the price of a bond with no accrued or earned interest,which is called the:

Accepted Answer

A) dirty price. 
B) asked price. 
C) spread. 
D) clean price. 
E) coupon price. 
A) dirty price. 
B) asked price. 
C) spread. 
D) clean price. 
E) coupon price.

Question 17

Which of the following sources can be used by an investor to obtain a corporation's annual report?

Accepted Answer

A) Professional advisory services 
B) Corporation's website 
C) Phone call to corporation 
D) Written request mailed to the corporation 
E) All of these sources can be used by an investor to obtain an annual report. 
A) Professional advisory services 
B) Corporation's website 
C) Phone call to corporation 
D) Written request mailed to the corporation 
E) All of these sources can be used by an investor to obtain an annual report.

Question 18

What is bond laddering?

Accepted Answer

A) Buying only long-term bonds 
B) Buying only short-term bonds 
C) Buying bonds with maturity dates spread out over a number of years 
D) Combining stock and bond investments 
E) Exchanging bonds for shares of stock 
A) Buying only long-term bonds 
B) Buying only short-term bonds 
C) Buying bonds with maturity dates spread out over a number of years 
D) Combining stock and bond investments 
E) Exchanging bonds for shares of stock

Question 19

Which of the following statements is true with respect to U.S.Treasury securities?

Accepted Answer

A) Treasury bills are issued in minimum units of $10,000 with maturities that range from 10 to 30 years. 
B) Typical maturities for treasury notes are 2,3,5,7,and 10 years. 
C) Treasury bonds are issued in $5,000 units with 10-year maturities. 
D) The Treasury no longer issues Treasury bills. 
E) Treasury bills generally pay a higher interest rate than Treasury bonds. 
A) Treasury bills are issued in minimum units of $10,000 with maturities that range from 10 to 30 years. 
B) Typical maturities for treasury notes are 2,3,5,7,and 10 years. 
C) Treasury bonds are issued in $5,000 units with 10-year maturities. 
D) The Treasury no longer issues Treasury bills. 
E) Treasury bills generally pay a higher interest rate than Treasury bonds.

Question 20

When investing in bonds,there are a lot of factors to consider.To help you decide if a bond is a good investment that will help you reach your financial goals,list 4 steps you can take.

Accepted Answer

1.Determine what type of bond you want.

If the current yield for a $1,000 corporate bond is 8 percent and it has a current market value of $900,then what is the annual income generated by the investment?

For government bonds,the difference between the bid price and the ask price is called the:

Nancy Groom owns a $1,000 corporate bond that pays 6 percent.What is the dollar amount of each semiannual interest payment?

Which one of the following is issued by state and local governments?

A legal debt convertible to shares of common stock at the investor's option is called a(n)________.

________ are bonds of a single issue that mature on different dates.

If a bond is quoted in the newspaper at 96,the current price of a $1,000 face value bond is:

Mary Smith would like to invest in 10 T-bills that will have a maturity value of $1,000.The bills have a stated interest rate of 2 percent.What would be the purchase price of these T-bills?

What are the three ways to make money with a bond investment?

Usually,interest on corporate bonds is paid to the bondholder every:

Which of the following are owned by a company and can be used to secure a mortgage bond?

June Tavia is trying to calculate the taxable equivalent yield for a municipal bond.If the bond she owns pays 5 percent interest and she is in the 22 percent tax bracket,what is the taxable-equivalent yield (round to nearest percent)?

The commissions for purchasing bonds:

To ensure that it has sufficient funds available to redeem a bond issue,a corporation may issue ________ bonds.

The only way an investor can make money on a bond investment is to hold the bond until maturity.

In the U.S.,bond price quotations are based on the price of a bond with no accrued or earned interest,which is called the:

Which of the following sources can be used by an investor to obtain a corporation's annual report?

What is bond laddering?

Which of the following statements is true with respect to U.S.Treasury securities?

When investing in bonds,there are a lot of factors to consider.To help you decide if a bond is a good investment that will help you reach your financial goals,list 4 steps you can take.

Personal Finance Basics and the Time Value of Money

Financial Aspects of Career Planning

Money Management Strategy: Financial Statements and Budgeting

Planning Your Tax Strategy

Financial Services: Savings Plans and Payment Accounts

Introduction to Consumer Credit

Choosing a Source of Credit: the Costs of Credit Alternatives

Consumer Purchasing Strategies and Legal Protection

The Housing Decision: Factors and Finances

Property and Motor Vehicle Insurance

Health,disability,and Long-Term Care Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Mutual Funds

Investing in Real Estate and Other Investment Alternatives

Starting Early: Retirement Planning

Estate Planning

Filters

Exam 15: Investing in Bonds

If the current yield for a $1,000 corporate bond is 8 percent and it has a current market value of $900,then what is the annual income generated by the investment?

For government bonds,the difference between the bid price and the ask price is called the:

Nancy Groom owns a $1,000 corporate bond that pays 6 percent.What is the dollar amount of each semiannual interest payment?

Which one of the following is issued by state and local governments?

A legal debt convertible to shares of common stock at the investor's option is called a(n)________.

________ are bonds of a single issue that mature on different dates.

If a bond is quoted in the newspaper at 96,the current price of a $1,000 face value bond is:

Mary Smith would like to invest in 10 T-bills that will have a maturity value of $1,000.The bills have a stated interest rate of 2 percent.What would be the purchase price of these T-bills?

What are the three ways to make money with a bond investment?

Usually,interest on corporate bonds is paid to the bondholder every:

Which of the following are owned by a company and can be used to secure a mortgage bond?

June Tavia is trying to calculate the taxable equivalent yield for a municipal bond.If the bond she owns pays 5 percent interest and she is in the 22 percent tax bracket,what is the taxable-equivalent yield (round to nearest percent)?

The commissions for purchasing bonds:

To ensure that it has sufficient funds available to redeem a bond issue,a corporation may issue ________ bonds.

The only way an investor can make money on a bond investment is to hold the bond until maturity.

In the U.S.,bond price quotations are based on the price of a bond with no accrued or earned interest,which is called the:

Which of the following sources can be used by an investor to obtain a corporation's annual report?

What is bond laddering?

Which of the following statements is true with respect to U.S.Treasury securities?

When investing in bonds,there are a lot of factors to consider.To help you decide if a bond is a good investment that will help you reach your financial goals,list 4 steps you can take.

Personal Finance Basics and the Time Value of Money

Financial Aspects of Career Planning

Money Management Strategy: Financial Statements and Budgeting

Planning Your Tax Strategy

Financial Services: Savings Plans and Payment Accounts

Introduction to Consumer Credit

Choosing a Source of Credit: the Costs of Credit Alternatives

Consumer Purchasing Strategies and Legal Protection

The Housing Decision: Factors and Finances

Property and Motor Vehicle Insurance

Health,disability,and Long-Term Care Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Mutual Funds

Investing in Real Estate and Other Investment Alternatives

Starting Early: Retirement Planning

Estate Planning

Filters