Question 1

Which of the following statements is not true about Treasury Inflation-Protected Securities?

Accepted Answer

A) They are currently sold with 5-,10-,or 30-year maturities. 
B) The amount of principal increases with inflation and decreases with deflation. 
C) They pay interest twice a year,at a fixed rate. 
D) They can be held until maturity or sold before maturity. 
E) Interest income and growth in principal are exempt from federal income tax. 
A) They are currently sold with 5-,10-,or 30-year maturities. 
B) The amount of principal increases with inflation and decreases with deflation. 
C) They pay interest twice a year,at a fixed rate. 
D) They can be held until maturity or sold before maturity. 
E) Interest income and growth in principal are exempt from federal income tax.

Question 2

High-yield (junk)bonds are sold by companies:

Accepted Answer

A) with a poor earnings history. 
B) with a questionable credit record. 
C) with lower ratings by major rating services. 
D) that are newer and have unproven ability to increase sales and earn profits. 
E) All of these 
A) with a poor earnings history. 
B) with a questionable credit record. 
C) with lower ratings by major rating services. 
D) that are newer and have unproven ability to increase sales and earn profits. 
E) All of these

Question 3

A bond that is repaid from the income generated by the project it is designed to finance is called a:

Accepted Answer

A) Treasury bill. 
B) savings bond. 
C) revenue bond. 
D) general obligation bond. 
E) agency bond. 
A) Treasury bill. 
B) savings bond. 
C) revenue bond. 
D) general obligation bond. 
E) agency bond.

Question 4

Treasury notes are issued in $100 units with a maturity of more than 1 year but not more than 10 years.

Accepted Answer

A) True 
 B)False

Question 5

Dick Dowen just bought a bond that is only secured by the reputation of the issuing corporation.What type of bond has Dick purchased?

Accepted Answer

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

Question 6

If a bond is purchased at a price above the face value,the yield to maturity will be:

Accepted Answer

A) greater than the stated interest rate. 
B) the same as the stated interest rate. 
C) less than the stated interest rate. 
D) zero. 
E) of no significance. 
A) greater than the stated interest rate. 
B) the same as the stated interest rate. 
C) less than the stated interest rate. 
D) zero. 
E) of no significance.

Question 7

A sinking fund is a fund to which deposits are made each year for the purpose of redeeming a bond issue.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following factors is used to calculate the total return on the sale of a bond?

Accepted Answer

A) Commission when bond was purchased 
B) Interest earned on the bond 
C) Cost of the bond when purchased 
D) Dollar return when the bond was sold 
E) All of these 
A) Commission when bond was purchased 
B) Interest earned on the bond 
C) Cost of the bond when purchased 
D) Dollar return when the bond was sold 
E) All of these

Question 9

A call feature:

Accepted Answer

A) allows bondholders to convert their bond to a specified number of shares of common stock. 
B) is not available on corporate bonds. 
C) allows the corporation to buy outstanding bonds from current bondholders before the maturity date. 
D) is only available with government securities. 
E) is guaranteed by the corporation. 
A) allows bondholders to convert their bond to a specified number of shares of common stock. 
B) is not available on corporate bonds. 
C) allows the corporation to buy outstanding bonds from current bondholders before the maturity date. 
D) is only available with government securities. 
E) is guaranteed by the corporation.

Question 10

For both Moody's and Standard & Poor's,the first two categories (high-grade and medium-grade)represent investment-grade securities.

Accepted Answer

A) True 
 B)False

Question 11

Corporate bonds that pay higher interest but also have a higher risk of default are called:

Accepted Answer

A) convertible bonds. 
B) high-yield bonds. 
C) mortgage bonds. 
D) serial bonds. 
E) callable bonds. 
A) convertible bonds. 
B) high-yield bonds. 
C) mortgage bonds. 
D) serial bonds. 
E) callable bonds.

Question 12

Interest checks for registered bonds are generally mailed directly to the bondholder of record.

Accepted Answer

A) True 
 B)False

Question 13

The legal conditions for a corporate bond are described in the:

Accepted Answer

A) trustee contract. 
B) bondholder's covenant. 
C) corporate charter. 
D) bond indenture. 
E) bond debenture. 
A) trustee contract. 
B) bondholder's covenant. 
C) corporate charter. 
D) bond indenture. 
E) bond debenture.

Question 14

Bond interest payments are a tax-deductible expense for a corporation.

Accepted Answer

A) True 
 B)False

Question 15

With the use of technology and computers,the book entry form of bond ownership is no longer used.

Accepted Answer

A) True 
 B)False

Question 16

The ________ is the dollar amount the bondholder will receive at the bond's maturity.

Accepted Answer

A) annual interest 
B) semiannual interest 
C) premium 
D) face value 
E) commission 
A) annual interest 
B) semiannual interest 
C) premium 
D) face value 
E) commission

Question 17

Which type of bond would provide a high degree of price stability,because the bonds are not very sensitive to changing interest rates?

Accepted Answer

A) Discount 
B) Short-term 
C) Long-term 
D) Speculative 
E) registered 
A) Discount 
B) Short-term 
C) Long-term 
D) Speculative 
E) registered

Question 18

Define four of these six terms.
(A)corporate bond 
(B)bond indenture 
(C)trustee 
(D)mortgage bond 
(E)debenture bond 
(F)convertible bond

Accepted Answer

(A)A corporate bond is a corporation's w

Question 19

To calculate the current yield for a T-bill:

Accepted Answer

A) divide the maturity value by the interest rate. 
B) multiply the maturity value by the interest rate. 
C) subtract the discount amount from the maturity value. 
D) divide the purchase price by the discount amount. 
E) divide the discount amount by the purchase price. 
A) divide the maturity value by the interest rate. 
B) multiply the maturity value by the interest rate. 
C) subtract the discount amount from the maturity value. 
D) divide the purchase price by the discount amount. 
E) divide the discount amount by the purchase price.

Question 20

Cynthia Smith is concerned about ABC company's ability to make future interest payments on their bonds.What ratio can help her evaluate this concern?

Accepted Answer

A) Bond price calculation 
B) Current yield calculation 
C) Yield to maturity 
D) Times interest earned 
E) Dividend yield 
A) Bond price calculation 
B) Current yield calculation 
C) Yield to maturity 
D) Times interest earned 
E) Dividend yield

Which of the following statements is not true about Treasury Inflation-Protected Securities?

High-yield (junk)bonds are sold by companies:

A bond that is repaid from the income generated by the project it is designed to finance is called a:

Treasury notes are issued in $100 units with a maturity of more than 1 year but not more than 10 years.

Dick Dowen just bought a bond that is only secured by the reputation of the issuing corporation.What type of bond has Dick purchased?

If a bond is purchased at a price above the face value,the yield to maturity will be:

A sinking fund is a fund to which deposits are made each year for the purpose of redeeming a bond issue.

Which of the following factors is used to calculate the total return on the sale of a bond?

A call feature:

For both Moody's and Standard & Poor's,the first two categories (high-grade and medium-grade)represent investment-grade securities.

Corporate bonds that pay higher interest but also have a higher risk of default are called:

Interest checks for registered bonds are generally mailed directly to the bondholder of record.

The legal conditions for a corporate bond are described in the:

Bond interest payments are a tax-deductible expense for a corporation.

With the use of technology and computers,the book entry form of bond ownership is no longer used.

The ________ is the dollar amount the bondholder will receive at the bond's maturity.

Which type of bond would provide a high degree of price stability,because the bonds are not very sensitive to changing interest rates?

Define four of these six terms. (A)corporate bond (B)bond indenture (C)trustee (D)mortgage bond (E)debenture bond (F)convertible bond

To calculate the current yield for a T-bill:

Cynthia Smith is concerned about ABC company's ability to make future interest payments on their bonds.What ratio can help her evaluate this concern?

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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Exam 15: Investing in Bonds

Which of the following statements is not true about Treasury Inflation-Protected Securities?

High-yield (junk)bonds are sold by companies:

A bond that is repaid from the income generated by the project it is designed to finance is called a:

Treasury notes are issued in $100 units with a maturity of more than 1 year but not more than 10 years.

Dick Dowen just bought a bond that is only secured by the reputation of the issuing corporation.What type of bond has Dick purchased?

If a bond is purchased at a price above the face value,the yield to maturity will be:

A sinking fund is a fund to which deposits are made each year for the purpose of redeeming a bond issue.

Which of the following factors is used to calculate the total return on the sale of a bond?

A call feature:

For both Moody's and Standard & Poor's,the first two categories (high-grade and medium-grade)represent investment-grade securities.

Corporate bonds that pay higher interest but also have a higher risk of default are called:

Interest checks for registered bonds are generally mailed directly to the bondholder of record.

The legal conditions for a corporate bond are described in the:

Bond interest payments are a tax-deductible expense for a corporation.

With the use of technology and computers,the book entry form of bond ownership is no longer used.

The ________ is the dollar amount the bondholder will receive at the bond's maturity.

Which type of bond would provide a high degree of price stability,because the bonds are not very sensitive to changing interest rates?

Define four of these six terms. (A)corporate bond (B)bond indenture (C)trustee (D)mortgage bond (E)debenture bond (F)convertible bond

To calculate the current yield for a T-bill:

Cynthia Smith is concerned about ABC company's ability to make future interest payments on their bonds.What ratio can help her evaluate this concern?

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