Question 1

U.S. government agency bonds pay interest that is subject to which of the following taxes?

Accepted Answer

A) federal only 
B) state only 
C) state and local only 
D) state and federal only 
E) state, local, and federal 
A) federal only 
B) state only 
C) state and local only 
D) state and federal only 
E) state, local, and federal

Question 2

Which one of the following statements applies to U.S. Treasury bonds?

Accepted Answer

A) They have original maturities of 1 to 10 years. 
B) They have a minimum face value of $100,000. 
C) They are zero-coupon securities. 
D) They pay a fixed coupon payment semiannually. 
E) They are adjusted semiannually for inflation. 
A) They have original maturities of 1 to 10 years. 
B) They have a minimum face value of $100,000. 
C) They are zero-coupon securities. 
D) They pay a fixed coupon payment semiannually. 
E) They are adjusted semiannually for inflation.

Question 3

What is the lowest accepted competitive bid in a U.S. Treasury auction called?

Accepted Answer

A) selected price 
B) base price 
C) stop-out bid 
D) imputed bid 
E) set bid 
A) selected price 
B) base price 
C) stop-out bid 
D) imputed bid 
E) set bid

Question 4

Which one of the following terms is defined as debt issued without specific collateral pledged as security?

Accepted Answer

A) unsecured debt 
B) indenture 
C) vanilla bond 
D) naked bond 
E) risk-free bond 
A) unsecured debt 
B) indenture 
C) vanilla bond 
D) naked bond 
E) risk-free bond

Question 5

Which one of the following parties is the largest holder of U.S. corporate bonds?

Accepted Answer

A) pension funds 
B) life insurance companies 
C) banks 
D) foreign investors 
E) individual investors 
A) pension funds 
B) life insurance companies 
C) banks 
D) foreign investors 
E) individual investors

Question 6

Which one of the following provisions grants the bondholder the option of exchanging a bond for a pre-specified number of shares of stock of the same issuer?

Accepted Answer

A) put 
B) call 
C) equity 
D) conversion 
E) sinking 
A) put 
B) call 
C) equity 
D) conversion 
E) sinking

Question 7

Which one of the following is an unsecured bond that has a higher claim on a firm's assets than other unsecured bonds?

Accepted Answer

A) plain vanilla bond 
B) subordinated debenture 
C) refunded bond 
D) senior debenture 
E) collateral trust bond 
A) plain vanilla bond 
B) subordinated debenture 
C) refunded bond 
D) senior debenture 
E) collateral trust bond

Question 8

A $5,000 face value municipal bond matures in 10 years and is priced at $4,850. The coupon rate is 4.75% with interest paid semiannually. What is the yield to maturity on the bond?

Accepted Answer

A) 4.77% 
B) 5.14% 
C) 5.40% 
D) 5.61% 
E) 5.85% 
A) 4.77% 
B) 5.14% 
C) 5.40% 
D) 5.61% 
E) 5.85%

Question 9

Which one of the following features of corporate bonds has the greatest appeal to pension fund investors?

Accepted Answer

A) call provision 
B) convertible provision 
C) zero repayment risk 
D) prospectus availability 
E) predictable cash flows 
A) call provision 
B) convertible provision 
C) zero repayment risk 
D) prospectus availability 
E) predictable cash flows

Question 10

Term bonds are defined as bonds issued with which one of the following characteristics?

Accepted Answer

A) sequential maturity dates 
B) serial maturity dates 
C) multiple maturity dates 
D) identical maturity dates 
E) renewable maturity dates 
A) sequential maturity dates 
B) serial maturity dates 
C) multiple maturity dates 
D) identical maturity dates 
E) renewable maturity dates

Question 11

Which one of the following provisions grants the bondholder the option of selling the bond back to the issuer at a pre-specified price on pre-specified dates?

Accepted Answer

A) convertible 
B) call 
C) put 
D) exchange 
E) sinking fund 
A) convertible 
B) call 
C) put 
D) exchange 
E) sinking fund

Question 12

A STRIPS matures in 5 years, has a face value of $15,000, and has a yield to maturity of 4.4%. What is the price?

Accepted Answer

A) $11,854.59 
B) $12,066.53 
C) $12,284.75 
D) $12,322.01 
E) $13,789.38 
A) $11,854.59 
B) $12,066.53 
C) $12,284.75 
D) $12,322.01 
E) $13,789.38

Question 13

A bond has a par value of $1,000 and a market price of $1,087.20. The conversion price is $40 and the stock price is $41.75. What is the conversion value?

Accepted Answer

A) $1,043.75 
B) $1,250.00 
C) $1,481.10 
D) $1,500.00 
E) $1,652.00 
A) $1,043.75 
B) $1,250.00 
C) $1,481.10 
D) $1,500.00 
E) $1,652.00

Question 14

A Treasury bond has a quoted bid price of 101.46875 and a quoted ask price of 101.6875. What is the amount you will receive if you sell your bond that has a par value of $15,000?

Accepted Answer

A) $15,016.12 
B) $15,050.45 
C) $15,062.60 
D) $15,100.08 
E) $15,220.31 
A) $15,016.12 
B) $15,050.45 
C) $15,062.60 
D) $15,100.08 
E) $15,220.31

U.S. government agency bonds pay interest that is subject to which of the following taxes?

Which one of the following statements applies to U.S. Treasury bonds?

What is the lowest accepted competitive bid in a U.S. Treasury auction called?

Which one of the following terms is defined as debt issued without specific collateral pledged as security?

Which one of the following parties is the largest holder of U.S. corporate bonds?

Which one of the following provisions grants the bondholder the option of exchanging a bond for a pre-specified number of shares of stock of the same issuer?

Which one of the following is an unsecured bond that has a higher claim on a firm's assets than other unsecured bonds?

A $5,000 face value municipal bond matures in 10 years and is priced at $4,850. The coupon rate is 4.75% with interest paid semiannually. What is the yield to maturity on the bond?

Which one of the following features of corporate bonds has the greatest appeal to pension fund investors?

Term bonds are defined as bonds issued with which one of the following characteristics?

Which one of the following provisions grants the bondholder the option of selling the bond back to the issuer at a pre-specified price on pre-specified dates?

A STRIPS matures in 5 years, has a face value of $15,000, and has a yield to maturity of 4.4%. What is the price?

A bond has a par value of $1,000 and a market price of $1,087.20. The conversion price is $40 and the stock price is $41.75. What is the conversion value?

A Treasury bond has a quoted bid price of 101.46875 and a quoted ask price of 101.6875. What is the amount you will receive if you sell your bond that has a par value of $15,000?

A Brief History of Risk and Return

The Investment Process

Overview of Security Tips

Mutual Funds and Other Investment Companies

The Stock Market

Common Stock Valuation

Stock Price Behavior and Market Efficiency

Behavioral Finance and the Psychology of Investing

Interest Rates

Bond Prices and Yields

Diversification and Risky Asset Allocation

Return, Risk, and the Security Market Line

Performance Evaluation and Risk Management

Futures Contracts

Stock Options

Option Valuation

Alternative Investments

Projecting Cash Flow and Earnings

Global Economic Activity and Industry Analysis

Mortgage-Backed Securities

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Exam 18: Corporate and Government Bonds

U.S. government agency bonds pay interest that is subject to which of the following taxes?

Which one of the following statements applies to U.S. Treasury bonds?

What is the lowest accepted competitive bid in a U.S. Treasury auction called?

Which one of the following terms is defined as debt issued without specific collateral pledged as security?

Which one of the following parties is the largest holder of U.S. corporate bonds?

Which one of the following provisions grants the bondholder the option of exchanging a bond for a pre-specified number of shares of stock of the same issuer?

Which one of the following is an unsecured bond that has a higher claim on a firm's assets than other unsecured bonds?

A $5,000 face value municipal bond matures in 10 years and is priced at $4,850. The coupon rate is 4.75% with interest paid semiannually. What is the yield to maturity on the bond?

Which one of the following features of corporate bonds has the greatest appeal to pension fund investors?

Term bonds are defined as bonds issued with which one of the following characteristics?

Which one of the following provisions grants the bondholder the option of selling the bond back to the issuer at a pre-specified price on pre-specified dates?

A STRIPS matures in 5 years, has a face value of $15,000, and has a yield to maturity of 4.4%. What is the price?

A bond has a par value of $1,000 and a market price of $1,087.20. The conversion price is $40 and the stock price is $41.75. What is the conversion value?

A Treasury bond has a quoted bid price of 101.46875 and a quoted ask price of 101.6875. What is the amount you will receive if you sell your bond that has a par value of $15,000?

A Brief History of Risk and Return

The Investment Process

Overview of Security Tips

Mutual Funds and Other Investment Companies

The Stock Market

Common Stock Valuation

Stock Price Behavior and Market Efficiency

Behavioral Finance and the Psychology of Investing

Interest Rates

Bond Prices and Yields

Diversification and Risky Asset Allocation

Return, Risk, and the Security Market Line

Performance Evaluation and Risk Management

Futures Contracts

Stock Options

Option Valuation

Alternative Investments

Projecting Cash Flow and Earnings

Global Economic Activity and Industry Analysis

Mortgage-Backed Securities

Filters