Question 1

Bonds reduce risk through diversification.

Accepted Answer

A) True 
 B)False  True

Question 2

Bonds which are very low rated,yet high yielding bonds are known as junk bonds.

Accepted Answer

A) True 
 B)False  True

Question 3

The issuer of the bond is effectively loaning money to the bondholder when the bond is purchased.

Accepted Answer

A) True 
 B)False  False

Question 4

Kathy Faust was paid all of her past dividends before any common stock dividends were declared.Obviously,she profited from preferred stock's ________ feature.

Accepted Answer

A)  adjustable rate 
B)  cumulative 
C)  convertible 
D)  multiple issue 
E)  callability 
A)  adjustable rate 
B)  cumulative 
C)  convertible 
D)  multiple issue 
E)  callability

Question 5

An unsecured long-term bond is known as a(n)

Accepted Answer

A)  bondenture. 
B)  indenture. 
C)  debenture. 
D)  abdenture. 
A)  bondenture. 
B)  indenture. 
C)  debenture. 
D)  abdenture.

Question 6

A bond's yield is always exactly the same as its coupon interest rate.

Accepted Answer

A) True 
 B)False

Question 7

Why does preferred stock not have the potential for capital gains like common stock does?

Accepted Answer

Capital gains represent the earnings gro

Question 8

Because there is no default or call risk associated with government bonds,they generally pay ________ rate of interest than other bonds.

Accepted Answer

A)  a higher 
B)  a lower 
C)  the same 
D)  none of the above 
A)  a higher 
B)  a lower 
C)  the same 
D)  none of the above

Question 9

Jacqueline is attempting to determine the value of her preferred stock.She needs to form a fraction with the annual preferred stock dividend on the top and ________ on the bottom.

Accepted Answer

A)  market price 
B)  book value 
C)  closing price 
D)  required rate of return 
E)  historical rate of return 
A)  market price 
B)  book value 
C)  closing price 
D)  required rate of return 
E)  historical rate of return

Question 10

You hold in your hands a legal document that provides the specific terms of the loan agreement,including a description of the bond,as well as the rights of the bondholder.You have a(n)

Accepted Answer

A)  agency contract. 
B)  bond signatory. 
C)  signatory contract. 
D)  indenture. 
E)  debenture. 
A)  agency contract. 
B)  bond signatory. 
C)  signatory contract. 
D)  indenture. 
E)  debenture.

Question 11

The invoice price of a bond

Accepted Answer

A)  is the price you pay if you buy the bond in the secondary market. 
B)  is the quoted price of the bond. 
C)  is the stated price of the bond plus the bond's accrued interest. 
D)  all of the above. 
E)  only A and C. 
A)  is the price you pay if you buy the bond in the secondary market. 
B)  is the quoted price of the bond. 
C)  is the stated price of the bond plus the bond's accrued interest. 
D)  all of the above. 
E)  only A and C.

Question 12

For an investor looking for capital gains,preferred stock is preferred over common stock.

Accepted Answer

A) True 
 B)False

Question 13

Compare and contrast preferred stock with bonds and common stock.

Accepted Answer

Preferred stock is often called a hybrid

Question 14

Tell what you will find in a bond listing in the Wall Street Journal.

Accepted Answer

The name of the bond will be listed in t

Question 15

A debenture is a long-term bond secured by collateral.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following determines what the annual interest payment on a bond will be?

Accepted Answer

A)  The par value of the bond 
B)  The maturity date of the bond 
C)  The coupon rate of the bond 
D)  All of the above are correct. 
E)  Only A and C are correct. 
A)  The par value of the bond 
B)  The maturity date of the bond 
C)  The coupon rate of the bond 
D)  All of the above are correct. 
E)  Only A and C are correct.

Question 17

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 18

Your required rate of return on company XYZ's preferred stock is 12%.Their preferred stock pays a fixed annual dividend of $4.A share of XYZ preferred is valued at

Accepted Answer

A)  $4.80. 
B)  $33.34. 
C)  $48.00. 
D)  $54.44. 
A)  $4.80. 
B)  $33.34. 
C)  $48.00. 
D)  $54.44.

Question 19

Bonds enjoy all but one of the following advantages.Which is it?

Accepted Answer

A)  When interest rates drop, bond prices rise. 
B)  Bonds may be called when interest rates drop. 
C)  They reduce risk through diversification. 
D)  Bonds produce steady income. 
E)  They can be a safe investment if held to maturity. 
A)  When interest rates drop, bond prices rise. 
B)  Bonds may be called when interest rates drop. 
C)  They reduce risk through diversification. 
D)  Bonds produce steady income. 
E)  They can be a safe investment if held to maturity.

Question 20

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

Accepted Answer

A) True 
 B)False

Bonds reduce risk through diversification.

Bonds which are very low rated,yet high yielding bonds are known as junk bonds.

The issuer of the bond is effectively loaning money to the bondholder when the bond is purchased.

Kathy Faust was paid all of her past dividends before any common stock dividends were declared.Obviously,she profited from preferred stock's ________ feature.

An unsecured long-term bond is known as a(n)

A bond's yield is always exactly the same as its coupon interest rate.

Why does preferred stock not have the potential for capital gains like common stock does?

Because there is no default or call risk associated with government bonds,they generally pay ________ rate of interest than other bonds.

Jacqueline is attempting to determine the value of her preferred stock.She needs to form a fraction with the annual preferred stock dividend on the top and ________ on the bottom.

You hold in your hands a legal document that provides the specific terms of the loan agreement,including a description of the bond,as well as the rights of the bondholder.You have a(n)

The invoice price of a bond

For an investor looking for capital gains,preferred stock is preferred over common stock.

Compare and contrast preferred stock with bonds and common stock.

Tell what you will find in a bond listing in the Wall Street Journal.

A debenture is a long-term bond secured by collateral.

Which of the following determines what the annual interest payment on a bond will be?

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.

Your required rate of return on company XYZ's preferred stock is 12%.Their preferred stock pays a fixed annual dividend of $4.A share of XYZ preferred is valued at

Bonds enjoy all but one of the following advantages.Which is it?

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

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

Student and Consumer Loans: The Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

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

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Exam 13: Investing in Bonds and Other Alternatives

Bonds reduce risk through diversification.

Bonds which are very low rated,yet high yielding bonds are known as junk bonds.

The issuer of the bond is effectively loaning money to the bondholder when the bond is purchased.

Kathy Faust was paid all of her past dividends before any common stock dividends were declared.Obviously,she profited from preferred stock's ________ feature.

An unsecured long-term bond is known as a(n)

A bond's yield is always exactly the same as its coupon interest rate.

Why does preferred stock not have the potential for capital gains like common stock does?

Because there is no default or call risk associated with government bonds,they generally pay ________ rate of interest than other bonds.

Jacqueline is attempting to determine the value of her preferred stock.She needs to form a fraction with the annual preferred stock dividend on the top and ________ on the bottom.

You hold in your hands a legal document that provides the specific terms of the loan agreement,including a description of the bond,as well as the rights of the bondholder.You have a(n)

The invoice price of a bond

For an investor looking for capital gains,preferred stock is preferred over common stock.

Compare and contrast preferred stock with bonds and common stock.

Tell what you will find in a bond listing in the Wall Street Journal.

A debenture is a long-term bond secured by collateral.

Which of the following determines what the annual interest payment on a bond will be?

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.

Your required rate of return on company XYZ's preferred stock is 12%.Their preferred stock pays a fixed annual dividend of $4.A share of XYZ preferred is valued at

Bonds enjoy all but one of the following advantages.Which is it?

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

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

Student and Consumer Loans: The Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

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