Question 1

The amount returned to the investor when a bond matures is called

Accepted Answer

A) principal. 
B) interest gain. 
C) capital gain. 
D) terminal value. 
A) principal. 
B) interest gain. 
C) capital gain. 
D) terminal value.

Question 2

Bonds usually pay interest

Accepted Answer

A) annually. 
B) semi-annually. 
C) quarterly. 
D) monthly. 
A) annually. 
B) semi-annually. 
C) quarterly. 
D) monthly.

Question 3

If the bond market expects a 10 percent yield,and ABC Ltd.pays coupon interest on its $1000 par value bond at eight percent semi-annually,the discount rate that investors should apply in the calculation of ABC Ltd.bond price should be

Accepted Answer

A) 4 percent. 
B) 10 percent. 
C) 8 percent. 
D) 5 percent. 
A) 4 percent. 
B) 10 percent. 
C) 8 percent. 
D) 5 percent.

Question 4

A passive strategy of bond investing consists of buying bonds for the long-term and not selling them until maturity.

Accepted Answer

A) True 
 B)False

Question 5

A Government of Canada bond has a 6 percent coupon which pays semi-annually and matures in 11 years.If interest rates have declined to 5.4 percent for similar bonds,what should be the price for this bond? (Assume $1000 par value)

Accepted Answer

A) $1006.99 
B) $1048.81 
C) $1031.62 
D) $1049.28 
A) $1006.99 
B) $1048.81 
C) $1031.62 
D) $1049.28

Question 6

Leonardo purchased a bond today with an 8 percent semi-annual coupon and with a face value of $15 000.A semi-annual coupon is due in exactly one month and the bond was priced at 94.8.What was the total price for the bond?

Accepted Answer

First,the seller is owed five months' ac

Question 7

Given the following bond information:  
What would be the taxable income on this bond if it were purchased at this price on June 1st and sold December 1st for a price of 103.00 and has face value of $20 000 and a semi-annual coupon payment?

Accepted Answer

A) Taxable capital gain of $800 and interest of $630. 
B) Taxable capital gain of $400 and interest of $315. 
C) Taxable capital gain of $1600 and interest of $656. 
D) Taxable capital gain of $200 and interest of $157.50. 
A) Taxable capital gain of $800 and interest of $630. 
B) Taxable capital gain of $400 and interest of $315. 
C) Taxable capital gain of $1600 and interest of $656. 
D) Taxable capital gain of $200 and interest of $157.50.

Question 8

Name and explain five risks involved with investing in bonds and indicate the magnitude of these risks and ways to mitigate them.

Accepted Answer

Default risk is the risk that the issuer

Question 9

List and describe three strategies to invest in bonds.

Accepted Answer

Interest rate strategy is selecting bond

Question 10

Which of the following should be the highest yield bonds?

Accepted Answer

A) Standard and Poor's rated C bonds 
B) Moody's rated C bonds 
C) Standard and Poor's rated CCC bonds 
D) Moody's rated Ca bonds 
A) Standard and Poor's rated C bonds 
B) Moody's rated C bonds 
C) Standard and Poor's rated CCC bonds 
D) Moody's rated Ca bonds

Question 11

Bonds with a high degree of default risk are most susceptible to default when economic conditions are

Accepted Answer

A) strong. 
B) weak. 
C) stable. 
D) expanding. 
A) strong. 
B) weak. 
C) stable. 
D) expanding.

Question 12

If you paid $9600 for a bond with par value of $10 000 and a 5 percent coupon rate,the semi-annual payment would be $250.

Accepted Answer

A) True 
 B)False

Question 13

The yield to maturity on at $10 000 face value bond with semi-annual coupon of 3 percent,maturing in three years and price of $9180 is 6 percent.

Accepted Answer

A) True 
 B)False

Question 14

Bonds that may be exchanged for common stock at the option of the bondholders are called

Accepted Answer

A) option bonds. 
B) convertible bonds. 
C) callable bonds. 
D) stock bonds. 
A) option bonds. 
B) convertible bonds. 
C) callable bonds. 
D) stock bonds.

Question 15

When there is an element of default risk on a bond,the interest rate will include

Accepted Answer

A) additional premium. 
B) risk premium. 
C) default premium. 
D) nominal premium. 
A) additional premium. 
B) risk premium. 
C) default premium. 
D) nominal premium.

Question 16

T-Bills and BAs are both very secure short-term debt securities which pay the same interest rate.

Accepted Answer

A) True 
 B)False

Question 17

If you buy a corporate bond for $9700 and sell it six months later for $10 500,you will have

Accepted Answer

A) interest income of $800. 
B) a capital gain of $800. 
C) a taxable capital gain of $800. 
D) non-taxable income of $800. 
A) interest income of $800. 
B) a capital gain of $800. 
C) a taxable capital gain of $800. 
D) non-taxable income of $800.

Question 18

Which of the following bonds would be most attractive to an investor who is very concerned about risk?

Accepted Answer

A) A real return bond maturing in five years 
B) A government of Canada bond maturing in fifteen years 
C) A government of Canada strip bond maturing in ten years 
D) An AAA rated corporate bond maturing in five years 
A) A real return bond maturing in five years 
B) A government of Canada bond maturing in fifteen years 
C) A government of Canada strip bond maturing in ten years 
D) An AAA rated corporate bond maturing in five years

Question 19

Investors purchase bonds because

Accepted Answer

A) they are a risk-free investment. 
B) they pay interest income. 
C) they pay dividends. 
D) the returns are higher than with stocks. 
A) they are a risk-free investment. 
B) they pay interest income. 
C) they pay dividends. 
D) the returns are higher than with stocks.

Question 20

A corporate bond trading at below par will have

Accepted Answer

A) a higher yield to maturity than the coupon rate. 
B) a lower yield to maturity than the coupon rate. 
C) lower risk than one trading at par. 
D) higher risk than one trading at par. 
A) a higher yield to maturity than the coupon rate. 
B) a lower yield to maturity than the coupon rate. 
C) lower risk than one trading at par. 
D) higher risk than one trading at par.

The amount returned to the investor when a bond matures is called

Bonds usually pay interest

If the bond market expects a 10 percent yield,and ABC Ltd.pays coupon interest on its $1000 par value bond at eight percent semi-annually,the discount rate that investors should apply in the calculation of ABC Ltd.bond price should be

A passive strategy of bond investing consists of buying bonds for the long-term and not selling them until maturity.

A Government of Canada bond has a 6 percent coupon which pays semi-annually and matures in 11 years.If interest rates have declined to 5.4 percent for similar bonds,what should be the price for this bond? (Assume $1000 par value)

Leonardo purchased a bond today with an 8 percent semi-annual coupon and with a face value of $15 000.A semi-annual coupon is due in exactly one month and the bond was priced at 94.8.What was the total price for the bond?

Given the following bond information: What would be the taxable income on this bond if it were purchased at this price on June 1st and sold December 1st for a price of 103.00 and has face value of $20 000 and a semi-annual coupon payment?

Name and explain five risks involved with investing in bonds and indicate the magnitude of these risks and ways to mitigate them.

List and describe three strategies to invest in bonds.

Which of the following should be the highest yield bonds?

Bonds with a high degree of default risk are most susceptible to default when economic conditions are

If you paid $9600 for a bond with par value of $10 000 and a 5 percent coupon rate,the semi-annual payment would be $250.

The yield to maturity on at $10 000 face value bond with semi-annual coupon of 3 percent,maturing in three years and price of $9180 is 6 percent.

Bonds that may be exchanged for common stock at the option of the bondholders are called

When there is an element of default risk on a bond,the interest rate will include

T-Bills and BAs are both very secure short-term debt securities which pay the same interest rate.

If you buy a corporate bond for $9700 and sell it six months later for $10 500,you will have

Which of the following bonds would be most attractive to an investor who is very concerned about risk?

Investors purchase bonds because

A corporate bond trading at below par will have

Overview of a Financial Plan

Tools for Financial Planning - Applying Time Value Concepts

Tools for Financial Planning - Planning with Personal Financial Statements

Tools for Financial Planning - Using Tax Concepts for Planning

Managing Your Financial Resources - Banking Services and Managing Your Money

Managing Your Financial Resources - Assessing, Managing, and Securing Your Credit

Managing Your Financial Resources - Purchasing and Financing a Home

Protecting Your Wealth - Auto and Homeowner's Insurance

Protecting Your Wealth - Health and Life Insurance

Personal Investing - Investing Fundamentals

Personal Investing - Investing in Stocks

Personal Investing - Investing in Mutual Funds

Retirement and Estate Planning - Retirement Planning

Retirement and Estate Planning - Estate Planning

Synthesis of Financial Planning - Integrating the Components of a Financial Plan

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Exam 12: Personal Investing - Investing in Bonds

The amount returned to the investor when a bond matures is called

Bonds usually pay interest

If the bond market expects a 10 percent yield,and ABC Ltd.pays coupon interest on its $1000 par value bond at eight percent semi-annually,the discount rate that investors should apply in the calculation of ABC Ltd.bond price should be

A passive strategy of bond investing consists of buying bonds for the long-term and not selling them until maturity.

A Government of Canada bond has a 6 percent coupon which pays semi-annually and matures in 11 years.If interest rates have declined to 5.4 percent for similar bonds,what should be the price for this bond? (Assume $1000 par value)

Leonardo purchased a bond today with an 8 percent semi-annual coupon and with a face value of $15 000.A semi-annual coupon is due in exactly one month and the bond was priced at 94.8.What was the total price for the bond?

Given the following bond information: What would be the taxable income on this bond if it were purchased at this price on June 1st and sold December 1st for a price of 103.00 and has face value of $20 000 and a semi-annual coupon payment?

Name and explain five risks involved with investing in bonds and indicate the magnitude of these risks and ways to mitigate them.

List and describe three strategies to invest in bonds.

Which of the following should be the highest yield bonds?

Bonds with a high degree of default risk are most susceptible to default when economic conditions are

If you paid $9600 for a bond with par value of $10 000 and a 5 percent coupon rate,the semi-annual payment would be $250.

The yield to maturity on at $10 000 face value bond with semi-annual coupon of 3 percent,maturing in three years and price of $9180 is 6 percent.

Bonds that may be exchanged for common stock at the option of the bondholders are called

When there is an element of default risk on a bond,the interest rate will include

T-Bills and BAs are both very secure short-term debt securities which pay the same interest rate.

If you buy a corporate bond for $9700 and sell it six months later for $10 500,you will have

Which of the following bonds would be most attractive to an investor who is very concerned about risk?

Investors purchase bonds because

A corporate bond trading at below par will have

Overview of a Financial Plan

Tools for Financial Planning - Applying Time Value Concepts

Tools for Financial Planning - Planning with Personal Financial Statements

Tools for Financial Planning - Using Tax Concepts for Planning

Managing Your Financial Resources - Banking Services and Managing Your Money

Managing Your Financial Resources - Assessing, Managing, and Securing Your Credit

Managing Your Financial Resources - Purchasing and Financing a Home

Protecting Your Wealth - Auto and Homeowner's Insurance

Protecting Your Wealth - Health and Life Insurance

Personal Investing - Investing Fundamentals

Personal Investing - Investing in Stocks

Personal Investing - Investing in Mutual Funds

Retirement and Estate Planning - Retirement Planning

Retirement and Estate Planning - Estate Planning

Synthesis of Financial Planning - Integrating the Components of a Financial Plan

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