Question 1

If overall interest rates in the economy rise,a corporate bond with a fixed interest rate will generally:

Accepted Answer

A) increase in value. 
B) decrease in value. 
C) remain unchanged. 
D) become worthless. 
E) be returned to the corporation. 
A) increase in value. 
B) decrease in value. 
C) remain unchanged. 
D) become worthless. 
E) be returned to the corporation.

Question 2

Today,almost all bond ownership records are maintained by a process called:

Accepted Answer

A) certified registration. 
B) book entry. 
C) revenue recognition process. 
D) coupon registration. 
E) general obligation process. 
A) certified registration. 
B) book entry. 
C) revenue recognition process. 
D) coupon registration. 
E) general obligation process.

Question 3

Why do corporations sell bonds?

Accepted Answer

A) To increase their financial leverage 
B) To pay for major purchases 
C) Because they are finding it difficult or impossible to sell stock 
D) Because the interest is tax-deductible 
E) All of these 
A) To increase their financial leverage 
B) To pay for major purchases 
C) Because they are finding it difficult or impossible to sell stock 
D) Because the interest is tax-deductible 
E) All of these

Question 4

A general obligation bond is a bond that is repaid from the income generated by the project it is designed to finance.

Accepted Answer

A) True 
 B)False

Question 5

XYZ Corporation wants to retire a $60 million bond issue before the maturity date.In order to call the bonds in this issue,the corporation must pay the bondholders the face value plus a premium.What is the typical premium for bonds that have been called?

Accepted Answer

A) $100 
B) $50-$100 
C) $20-$75 
D) $10-$25 
E) $1-$10 
A) $100 
B) $50-$100 
C) $20-$75 
D) $10-$25 
E) $1-$10

Question 6

A provision in the bond indenture that forces the corporation to make arrangements for bond repayment before the maturity date is called a(n)________ fund.

Accepted Answer

A) serial 
B) sinking 
C) debenture 
D) indenture 
E) money 
A) serial 
B) sinking 
C) debenture 
D) indenture 
E) money

Question 7

How do interest rates in the economy affect the price of a corporate bond?

Accepted Answer

All bonds are issued with a stated face

Question 8

Which one of the following statements is true regarding bond characteristics?

Accepted Answer

A) Corporate bonds do not have a maturity date. 
B) The maturity dates for corporate bonds are generally less than a year. 
C) Corporate bonds do not have to be repaid. 
D) Corporate bonds are a form of equity financing. 
E) Long-term corporate bonds have maturities over 10 years. 
A) Corporate bonds do not have a maturity date. 
B) The maturity dates for corporate bonds are generally less than a year. 
C) Corporate bonds do not have to be repaid. 
D) Corporate bonds are a form of equity financing. 
E) Long-term corporate bonds have maturities over 10 years.

Question 9

Maturity dates for intermediate term corporate bonds generally range from 3 to ________ years.

Accepted Answer

A) 10 
B) 15 
C) 20 
D) 25 
E) 30 
A) 10 
B) 15 
C) 20 
D) 25 
E) 30

Question 10

The current yield for a corporate bond is determined by dividing the annual income amount by the current market value.

Accepted Answer

A) True 
 B)False

Question 11

For Moody's and Standard & Poor's,the first ________ bond-rating categories represent investments suitable for conservative investors who want a safe investment that provides a predictable source of income.

Accepted Answer

A) two 
B) three 
C) four 
D) five 
E) six 
A) two 
B) three 
C) four 
D) five 
E) six

Question 12

A mortgage bond is a corporate bond that is secured by various assets of the issuing firm.

Accepted Answer

A) True 
 B)False

Question 13

If the approximate market value for of a $1,000 corporate bond is $1,200 and it pays 6 percent interest,then what are comparable bonds paying?

Accepted Answer

A) 2 percent 
B) 3 percent 
C) 4 percent 
D) 5 percent 
E) 6 percent 
A) 2 percent 
B) 3 percent 
C) 4 percent 
D) 5 percent 
E) 6 percent

Question 14

Which one of the following statements is true?

Accepted Answer

A) All metropolitan newspapers contain information on bonds. 
B) In bond quotations,prices are given as a percentage of the face value. 
C) The face value for most corporate bonds is $5,000. 
D) To find the actual price of a corporate bond,you must contact the corporation that originally issued the bond. 
E) To find the actual price of a corporate bond,you must call a stockbroker. 
A) All metropolitan newspapers contain information on bonds. 
B) In bond quotations,prices are given as a percentage of the face value. 
C) The face value for most corporate bonds is $5,000. 
D) To find the actual price of a corporate bond,you must contact the corporation that originally issued the bond. 
E) To find the actual price of a corporate bond,you must call a stockbroker.

Question 15

Because of the added security of collateral,the interest rates on ________ bonds are usually lower than interest rates on unsecured debenture bonds.

Accepted Answer

A) debenture 
B) mortgage 
C) indenture 
D) preemptive 
E) subordinated debenture 
A) debenture 
B) mortgage 
C) indenture 
D) preemptive 
E) subordinated debenture

Question 16

A bond backed by the full faith,credit,and unlimited taxing power of the state or local government that issued it is called a ________ bond.

Accepted Answer

A) debenture 
B) mortgage 
C) secured 
D) general obligation 
E) revenue 
A) debenture 
B) mortgage 
C) secured 
D) general obligation 
E) revenue

Question 17

Frank Riley just purchased a bond that is unsecured and is secondary to other unsecured bonds with respect to interest payments or repayment at maturity.What type of bond has Frank purchased?

Accepted Answer

A) High-yield 
B) Subordinated debenture 
C) Convertible 
D) Callable 
E) Municipal 
A) High-yield 
B) Subordinated debenture 
C) Convertible 
D) Callable 
E) Municipal

Question 18

Which of the following terms applies to a bond issue for which the corporation puts money aside at regular intervals for the purpose of redeeming the bonds?

Accepted Answer

A) Serial 
B) Default 
C) Sinking fund 
D) Low-coupon 
E) Convertible 
A) Serial 
B) Default 
C) Sinking fund 
D) Low-coupon 
E) Convertible

Question 19

The yield to maturity takes into account the relationship of a bond's maturity value,the time to maturity,the current price,and the dollar amount of interest.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is not true regarding Federal Agency debt issues from Fannie Mae or Ginnie Mae?

Accepted Answer

A) Agency debt issues do not have the same guarantee as U.S.Treasury securities. 
B) Agency debt issues often have a slightly higher interest rate than U.S.Treasury securities. 
C) Agency debt issues are callable before the maturity date. 
D) Investing in agency debt issues is simpler than buying and selling U.S.Treasury securities. 
E) Agency debt issues are not sponsored by the U.S.government. 
A) Agency debt issues do not have the same guarantee as U.S.Treasury securities. 
B) Agency debt issues often have a slightly higher interest rate than U.S.Treasury securities. 
C) Agency debt issues are callable before the maturity date. 
D) Investing in agency debt issues is simpler than buying and selling U.S.Treasury securities. 
E) Agency debt issues are not sponsored by the U.S.government.

If overall interest rates in the economy rise,a corporate bond with a fixed interest rate will generally:

Today,almost all bond ownership records are maintained by a process called:

Why do corporations sell bonds?

A general obligation bond is a bond that is repaid from the income generated by the project it is designed to finance.

XYZ Corporation wants to retire a $60 million bond issue before the maturity date.In order to call the bonds in this issue,the corporation must pay the bondholders the face value plus a premium.What is the typical premium for bonds that have been called?

A provision in the bond indenture that forces the corporation to make arrangements for bond repayment before the maturity date is called a(n)________ fund.

How do interest rates in the economy affect the price of a corporate bond?

Which one of the following statements is true regarding bond characteristics?

Maturity dates for intermediate term corporate bonds generally range from 3 to ________ years.

The current yield for a corporate bond is determined by dividing the annual income amount by the current market value.

For Moody's and Standard & Poor's,the first ________ bond-rating categories represent investments suitable for conservative investors who want a safe investment that provides a predictable source of income.

A mortgage bond is a corporate bond that is secured by various assets of the issuing firm.

If the approximate market value for of a $1,000 corporate bond is $1,200 and it pays 6 percent interest,then what are comparable bonds paying?

Which one of the following statements is true?

Because of the added security of collateral,the interest rates on ________ bonds are usually lower than interest rates on unsecured debenture bonds.

A bond backed by the full faith,credit,and unlimited taxing power of the state or local government that issued it is called a ________ bond.

Frank Riley just purchased a bond that is unsecured and is secondary to other unsecured bonds with respect to interest payments or repayment at maturity.What type of bond has Frank purchased?

Which of the following terms applies to a bond issue for which the corporation puts money aside at regular intervals for the purpose of redeeming the bonds?

The yield to maturity takes into account the relationship of a bond's maturity value,the time to maturity,the current price,and the dollar amount of interest.

Which of the following is not true regarding Federal Agency debt issues from Fannie Mae or Ginnie Mae?

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

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Exam 15: Investing in Bonds

If overall interest rates in the economy rise,a corporate bond with a fixed interest rate will generally:

Today,almost all bond ownership records are maintained by a process called:

Why do corporations sell bonds?

A general obligation bond is a bond that is repaid from the income generated by the project it is designed to finance.

XYZ Corporation wants to retire a $60 million bond issue before the maturity date.In order to call the bonds in this issue,the corporation must pay the bondholders the face value plus a premium.What is the typical premium for bonds that have been called?

A provision in the bond indenture that forces the corporation to make arrangements for bond repayment before the maturity date is called a(n)________ fund.

How do interest rates in the economy affect the price of a corporate bond?

Which one of the following statements is true regarding bond characteristics?

Maturity dates for intermediate term corporate bonds generally range from 3 to ________ years.

The current yield for a corporate bond is determined by dividing the annual income amount by the current market value.

For Moody's and Standard & Poor's,the first ________ bond-rating categories represent investments suitable for conservative investors who want a safe investment that provides a predictable source of income.

A mortgage bond is a corporate bond that is secured by various assets of the issuing firm.

If the approximate market value for of a $1,000 corporate bond is $1,200 and it pays 6 percent interest,then what are comparable bonds paying?

Which one of the following statements is true?

Because of the added security of collateral,the interest rates on ________ bonds are usually lower than interest rates on unsecured debenture bonds.

A bond backed by the full faith,credit,and unlimited taxing power of the state or local government that issued it is called a ________ bond.

Frank Riley just purchased a bond that is unsecured and is secondary to other unsecured bonds with respect to interest payments or repayment at maturity.What type of bond has Frank purchased?

Which of the following terms applies to a bond issue for which the corporation puts money aside at regular intervals for the purpose of redeeming the bonds?

The yield to maturity takes into account the relationship of a bond's maturity value,the time to maturity,the current price,and the dollar amount of interest.

Which of the following is not true regarding Federal Agency debt issues from Fannie Mae or Ginnie Mae?

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

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