Question 1

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 2

The current yield,the coupon rate,and the yield to maturity are equal if the bond sells at par value.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following best describes preferred stock?

Accepted Answer

A)  Like an indenture, it represents a legal obligation to the firm to pay dividends. 
B)  Like common stock, it represents an equity claim on the assets and earnings of the firm. 
C)  Like a bond, it pays out a fixed stream of income ahead of any common stock dividends. 
D)  All of the above are correct. 
E)  Only B and C are correct. 
A)  Like an indenture, it represents a legal obligation to the firm to pay dividends. 
B)  Like common stock, it represents an equity claim on the assets and earnings of the firm. 
C)  Like a bond, it pays out a fixed stream of income ahead of any common stock dividends. 
D)  All of the above are correct. 
E)  Only B and C are correct.

Question 4

Which of the following is true regarding fluctuations in the prices of bonds?

Accepted Answer

A)  When interest rates go up, bond prices go up. 
B)  When interest rates go down, you want to purchase very short-term bonds. 
C)  As interest rates rise, investors demand a higher return on bonds. 
D)  all of the above 
E)  only A and B 
A)  When interest rates go up, bond prices go up. 
B)  When interest rates go down, you want to purchase very short-term bonds. 
C)  As interest rates rise, investors demand a higher return on bonds. 
D)  all of the above 
E)  only A and B

Question 5

What is the purpose of the call provision on some bonds?

Accepted Answer

Many times the issuing company needs to

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

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 8

Randall has $25,000 and is considering investing in bonds.With this amount of start up money he should look into which of the following bonds?

Accepted Answer

A)  Agency bonds 
B)  Corporate bonds 
C)  Pass-through certificates 
D)  All of the above would be good choices. 
A)  Agency bonds 
B)  Corporate bonds 
C)  Pass-through certificates 
D)  All of the above would be good choices.

Question 9

When a bond is bought at a discount price below its par value,the current yield will be higher than the coupon rate.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following starts off with the highest risk bond and ends with the lowest risk bond?

Accepted Answer

A)  Municipal, Corporate, Treasury, Junk 
B)  Corporate, Junk, Treasury, Municipal 
C)  Junk, Corporate, Municipal, Treasury 
D)  Corporate, Junk, Municipal, Treasury 
A)  Municipal, Corporate, Treasury, Junk 
B)  Corporate, Junk, Treasury, Municipal 
C)  Junk, Corporate, Municipal, Treasury 
D)  Corporate, Junk, Municipal, Treasury

Question 11

Which of the following is not an example of speculative investing as outlined in the text?

Accepted Answer

A)  Gold 
B)  Silver 
C)  Stocks 
D)  Precious stones 
E)  Collectibles 
A)  Gold 
B)  Silver 
C)  Stocks 
D)  Precious stones 
E)  Collectibles

Question 12

Governments issue savings bonds such as the Series EE bonds in an attempt to meet the investing needs of the small investor.

Accepted Answer

A) True 
 B)False

Question 13

Interest payments on municipal bonds are exempt from federal taxes and state taxes as long as you live in the state in which the bonds were issued.

Accepted Answer

A) True 
 B)False

Question 14

What is the value of a $1,000 par value bond with a 12% annual coupon that will mature in 5 years if the bond is currently priced to yield 10%?

Accepted Answer

A)  $955.76 
B)  $1,000.00 
C)  $1,075.82 
D)  $1,158.52 
A)  $955.76 
B)  $1,000.00 
C)  $1,075.82 
D)  $1,158.52

Question 15

The main advantage to investing in real estate is liquidity.

Accepted Answer

A) True 
 B)False

Question 16

Suppose that you have a bond that has a par value of $1,000 and a coupon interest rate of 9%.Its current price is $950 and it will mature in 7 years.What is the yield to maturity?

Accepted Answer

A)  8.45% 
B)  9.00% 
C)  10.03% 
D)  10.23% 
A)  8.45% 
B)  9.00% 
C)  10.03% 
D)  10.23%

Question 17

What risks are you assuming with preferred stock that you would not have with common stock and bonds? Be specific.

Accepted Answer

When interest rates rise,the value of th

Question 18

A bond rating is really a measure of a bond's

Accepted Answer

A)  performance. 
B)  yield. 
C)  market value. 
D)  riskiness. 
E)  yield to maturity. 
A)  performance. 
B)  yield. 
C)  market value. 
D)  riskiness. 
E)  yield to maturity.

Question 19

If you were considering the purchase of a bond issued by a state,county,or city you would be considering the purchase of a ________ bond.

Accepted Answer

A)  state 
B)  municipal 
C)  government hedge 
D)  corporate 
E)  none of the above 
A)  state 
B)  municipal 
C)  government hedge 
D)  corporate 
E)  none of the above

Question 20

Approximately two-thirds of Americans own their own homes.

Accepted Answer

A) True 
 B)False

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

The current yield,the coupon rate,and the yield to maturity are equal if the bond sells at par value.

Which of the following best describes preferred stock?

Which of the following is true regarding fluctuations in the prices of bonds?

What is the purpose of the call provision on some bonds?

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

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

Randall has $25,000 and is considering investing in bonds.With this amount of start up money he should look into which of the following bonds?

When a bond is bought at a discount price below its par value,the current yield will be higher than the coupon rate.

Which of the following starts off with the highest risk bond and ends with the lowest risk bond?

Which of the following is not an example of speculative investing as outlined in the text?

Governments issue savings bonds such as the Series EE bonds in an attempt to meet the investing needs of the small investor.

Interest payments on municipal bonds are exempt from federal taxes and state taxes as long as you live in the state in which the bonds were issued.

What is the value of a $1,000 par value bond with a 12% annual coupon that will mature in 5 years if the bond is currently priced to yield 10%?

The main advantage to investing in real estate is liquidity.

Suppose that you have a bond that has a par value of $1,000 and a coupon interest rate of 9%.Its current price is $950 and it will mature in 7 years.What is the yield to maturity?

What risks are you assuming with preferred stock that you would not have with common stock and bonds? Be specific.

A bond rating is really a measure of a bond's

If you were considering the purchase of a bond issued by a state,county,or city you would be considering the purchase of a ________ bond.

Approximately two-thirds of Americans own their own homes.

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

Exam 13: Investing in Bonds and Other Alternatives

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

The current yield,the coupon rate,and the yield to maturity are equal if the bond sells at par value.

Which of the following best describes preferred stock?

Which of the following is true regarding fluctuations in the prices of bonds?

What is the purpose of the call provision on some bonds?

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

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

Randall has $25,000 and is considering investing in bonds.With this amount of start up money he should look into which of the following bonds?

When a bond is bought at a discount price below its par value,the current yield will be higher than the coupon rate.

Which of the following starts off with the highest risk bond and ends with the lowest risk bond?

Which of the following is not an example of speculative investing as outlined in the text?

Governments issue savings bonds such as the Series EE bonds in an attempt to meet the investing needs of the small investor.

Interest payments on municipal bonds are exempt from federal taxes and state taxes as long as you live in the state in which the bonds were issued.

What is the value of a $1,000 par value bond with a 12% annual coupon that will mature in 5 years if the bond is currently priced to yield 10%?

The main advantage to investing in real estate is liquidity.

Suppose that you have a bond that has a par value of $1,000 and a coupon interest rate of 9%.Its current price is $950 and it will mature in 7 years.What is the yield to maturity?

What risks are you assuming with preferred stock that you would not have with common stock and bonds? Be specific.

A bond rating is really a measure of a bond's

If you were considering the purchase of a bond issued by a state,county,or city you would be considering the purchase of a ________ bond.

Approximately two-thirds of Americans own their own homes.

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