Question 1

The largest single player and payer in the bond market ________.

Accepted Answer

A)  is corporate America 
B)  are municipal bond issuers 
C)  is the U.S. government 
D)  are foreign firms 
E)  are schools and county governments 
A)  is corporate America 
B)  are municipal bond issuers 
C)  is the U.S. government 
D)  are foreign firms 
E)  are schools and county governments

Question 2

Brittany has learned in her research that ________ are issued by the FNMA and the FHLB.

Accepted Answer

A)  pass-through certificates 
B)  agency bonds 
C)  treasury bonds 
D)  treasury inflation-indexed bonds 
A)  pass-through certificates 
B)  agency bonds 
C)  treasury bonds 
D)  treasury inflation-indexed bonds

Question 3

Suppose you just purchased a corporate bond with a par value of $1,000 for $951.25. It carries a 7% coupon rate and will mature in 5 years. What is the yield to maturity?

Accepted Answer

A)  6.14% 
B)  7% 
C)  8.23% 
D)  12% 
A)  6.14% 
B)  7% 
C)  8.23% 
D)  12%

Question 4

A secured bond is one that is backed by collateral.

Accepted Answer

A) True 
 B)False

Question 5

If a bond has a fixed coupon interest rate, the only way for the bond to increase its return to investors is to ________.

Accepted Answer

A)  drop in value and sell for less 
B)  increase in value and sell for more 
C)  change its coupon interest rate 
D)  All of the above are correct. 
A)  drop in value and sell for less 
B)  increase in value and sell for more 
C)  change its coupon interest rate 
D)  All of the above are correct.

Question 6

Karyn wants to evaluate some bonds she is contemplating buying. In order to adequately evaluate them, she should check the bond yields, read the bond quotes in a paper, and check the ________.

Accepted Answer

A)  par values 
B)  bond ratings 
C)  company rating 
D)  company's performance 
A)  par values 
B)  bond ratings 
C)  company rating 
D)  company's performance

Question 7

Vacation homes are the most popular of all the direct real estate investments.

Accepted Answer

A) True 
 B)False

Question 8

The market price of preferred stock is inversely related to the market rates of interest.

Accepted Answer

A) True 
 B)False

Question 9

Corporations receive a tax break on the dividend income from preferred stock.

Accepted Answer

A) True 
 B)False

Question 10

Most corporate bonds are tax-free bonds in the state the corporation is based in.

Accepted Answer

A) True 
 B)False

Question 11

Investors require a higher rate of return on bonds with higher bond ratings.

Accepted Answer

A) True 
 B)False

Question 12

The city of Houston passed a bond issue to build a bridge over the bay. The bond was to have the interest paid by the income generated by charging drivers a toll to cross the bridge. This is an example of a ________ bond.

Accepted Answer

A)  collateralized 
B)  cash 
C)  revenue 
D)  general obligation 
E)  none of the above 
A)  collateralized 
B)  cash 
C)  revenue 
D)  general obligation 
E)  none of the above

Question 13

A corporation that issues preferred stock will mostly likely call the stock when the market rates of interest increase.

Accepted Answer

A) True 
 B)False

Question 14

Michael Milkman has suggested that you consider the purchase of some bonds that are rated BB or below. He is asking you to purchase ________ bonds.

Accepted Answer

A)  junk 
B)  very risky 
C)  high-yield 
D)  All of the above 
E)  Only A and B. 
A)  junk 
B)  very risky 
C)  high-yield 
D)  All of the above 
E)  Only A and B.

Question 15

Alice recently bought dozens of collectable Barbie dolls. What ultimately will determine the investment value of Alice's Barbies when she goes to resell them?

Accepted Answer

A)  its return 
B)  its cost 
C)  book value 
D)  supply and demand 
E)  none of the above 
A)  its return 
B)  its cost 
C)  book value 
D)  supply and demand 
E)  none of the above

Question 16

State or municipal bonds that have interest and par value paid for with funds from a designated project or specific tax are known as ________ bonds.

Accepted Answer

A)  Series EE 
B)  life cycle 
C)  revenue 
D)  general obligation 
E)  none of the above 
A)  Series EE 
B)  life cycle 
C)  revenue 
D)  general obligation 
E)  none of the above

Question 17

Your friend wants you to seriously consider investing in bonds like she did. Why?

Accepted Answer

When interest rates decline, the price o

Question 18

Peter must read the ________, or legal agreement between the firm issuing the bond and the bond trustee who represents the bondholders.

Accepted Answer

A)  contract 
B)  indenture 
C)  provisions 
D)  debenture 
E)  prospectus 
A)  contract 
B)  indenture 
C)  provisions 
D)  debenture 
E)  prospectus

Question 19

When a bond is bought at a premium price above its par value, the current yield will be lower than the coupon rate.

Accepted Answer

A) True 
 B)False

Question 20

It is a fact that there is a(n) ________ relationship between interest rates and bond values in the secondary market. When interest rates ________, bond prices ________, and when interest rates ________, bond prices ________.

Accepted Answer

A)  direct; rise; rise; drop; drop 
B)  direct; rise; drop; drop; rise 
C)  inverse; rise; drop; drop; rise 
D)  inverse; rise; rise; drop; drop 
E)  direct; drop; rise; rise; drop 
A)  direct; rise; rise; drop; drop 
B)  direct; rise; drop; drop; rise 
C)  inverse; rise; drop; drop; rise 
D)  inverse; rise; rise; drop; drop 
E)  direct; drop; rise; rise; drop

The largest single player and payer in the bond market ________.

Brittany has learned in her research that ________ are issued by the FNMA and the FHLB.

Suppose you just purchased a corporate bond with a par value of $1,000 for $951.25. It carries a 7% coupon rate and will mature in 5 years. What is the yield to maturity?

A secured bond is one that is backed by collateral.

If a bond has a fixed coupon interest rate, the only way for the bond to increase its return to investors is to ________.

Karyn wants to evaluate some bonds she is contemplating buying. In order to adequately evaluate them, she should check the bond yields, read the bond quotes in a paper, and check the ________.

Vacation homes are the most popular of all the direct real estate investments.

The market price of preferred stock is inversely related to the market rates of interest.

Corporations receive a tax break on the dividend income from preferred stock.

Most corporate bonds are tax-free bonds in the state the corporation is based in.

Investors require a higher rate of return on bonds with higher bond ratings.

The city of Houston passed a bond issue to build a bridge over the bay. The bond was to have the interest paid by the income generated by charging drivers a toll to cross the bridge. This is an example of a ________ bond.

A corporation that issues preferred stock will mostly likely call the stock when the market rates of interest increase.

Michael Milkman has suggested that you consider the purchase of some bonds that are rated BB or below. He is asking you to purchase ________ bonds.

Alice recently bought dozens of collectable Barbie dolls. What ultimately will determine the investment value of Alice's Barbies when she goes to resell them?

State or municipal bonds that have interest and par value paid for with funds from a designated project or specific tax are known as ________ bonds.

Your friend wants you to seriously consider investing in bonds like she did. Why?

Peter must read the ________, or legal agreement between the firm issuing the bond and the bond trustee who represents the bondholders.

When a bond is bought at a premium price above its par value, the current yield will be lower than the coupon rate.

It is a fact that there is a(n) relationship between interest rates and bond values in the secondary market. When interest rates , bond prices , and when interest rates , bond prices .

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: The Role of Open Credit

Using Consumer Loans: The Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Securities Markets

Investing in Stocks

Mutual Funds: An Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Events Fitting the Pieces Together

Filters

Exam 14: Investing in Bonds and Other Alternatives

The largest single player and payer in the bond market ________.

Brittany has learned in her research that ________ are issued by the FNMA and the FHLB.

Suppose you just purchased a corporate bond with a par value of $1,000 for $951.25. It carries a 7% coupon rate and will mature in 5 years. What is the yield to maturity?

A secured bond is one that is backed by collateral.

If a bond has a fixed coupon interest rate, the only way for the bond to increase its return to investors is to ________.

Karyn wants to evaluate some bonds she is contemplating buying. In order to adequately evaluate them, she should check the bond yields, read the bond quotes in a paper, and check the ________.

Vacation homes are the most popular of all the direct real estate investments.

The market price of preferred stock is inversely related to the market rates of interest.

Corporations receive a tax break on the dividend income from preferred stock.

Most corporate bonds are tax-free bonds in the state the corporation is based in.

Investors require a higher rate of return on bonds with higher bond ratings.

The city of Houston passed a bond issue to build a bridge over the bay. The bond was to have the interest paid by the income generated by charging drivers a toll to cross the bridge. This is an example of a ________ bond.

A corporation that issues preferred stock will mostly likely call the stock when the market rates of interest increase.

Michael Milkman has suggested that you consider the purchase of some bonds that are rated BB or below. He is asking you to purchase ________ bonds.

Alice recently bought dozens of collectable Barbie dolls. What ultimately will determine the investment value of Alice's Barbies when she goes to resell them?

State or municipal bonds that have interest and par value paid for with funds from a designated project or specific tax are known as ________ bonds.

Your friend wants you to seriously consider investing in bonds like she did. Why?

Peter must read the ________, or legal agreement between the firm issuing the bond and the bond trustee who represents the bondholders.

When a bond is bought at a premium price above its par value, the current yield will be lower than the coupon rate.

It is a fact that there is a(n) ________ relationship between interest rates and bond values in the secondary market. When interest rates ________, bond prices ________, and when interest rates ________, bond prices ________.

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: The Role of Open Credit

Using Consumer Loans: The Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Securities Markets

Investing in Stocks

Mutual Funds: An Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Events Fitting the Pieces Together

Filters

It is a fact that there is a(n) relationship between interest rates and bond values in the secondary market. When interest rates , bond prices , and when interest rates , bond prices .