Exam 16: Investing in Bonds

Municipal bonds are most beneficial for investors who

An advantage to owning bonds is that investors can sell them to other investors in the primary market before the bonds reach maturity.

Another name for the par value of a bond is its ________.

Use the following two columns of items to answer the matching questions below: -face value A)annualized return on a bond if held to maturity B)par value or the amount returned to the investor at maturity C)bonds that can be converted into stock D)long-term securities issued by government agencies or corporations

When a bond has a call feature, the investor should consider the ________ when deciding whether to invest in the bond if it is not selling at par value.

If a bond's value rises above its face value during its life, interest rates have

As an investor, why should you consider investing in bonds?

The two future cash flows used to determine a bond value are the periodic coupon payments and the ________ at maturity.

During their lifetime, bonds can be sold for more or less than their face value depending on the market interest rates.

You should consider investing in bonds rather than stock if you

Some ________ bonds are called junk bonds, which have a high level of risk.

Bonds that have a call feature are less desirable to investors and therefore pay a slightly higher rate than bonds without this feature.

Bonds with longer maturities are more sensitive to interest rate movements than bonds that have shorter maturities.

Bonds that may be exchanged for common stock when the stock reaches a specified price are called