Question 1

Scott Turner has a bond with 10 years to maturity, a face value of $1,000, an 8% interest rate, and a market price of $800. What is the yield-to-maturity on this bond?

Accepted Answer

A)  4.00 percent 
B)  6.67 percent 
C)  8.00 percent 
D)  10.00 percent 
E)  11.11 percent 
A)  4.00 percent 
B)  6.67 percent 
C)  8.00 percent 
D)  10.00 percent 
E)  11.11 percent

Question 2

Today, bond ownership records are maintained using a process called:

Accepted Answer

A)  certified registration. 
B)  book entry. 
C)  revenue recognition process. 
D)  coupon registration. 
E)  general obligation process. 
A)  certified registration. 
B)  book entry. 
C)  revenue recognition process. 
D)  coupon registration. 
E)  general obligation process.

Question 3

A type of bond that is unsecured and gives bondholders a claim secondary to that of other designated bondholders with respect to both income and assets is called a:

Accepted Answer

A)  debenture bond. 
B)  mortgage bond. 
C)  subordinated debenture. 
D)  preemptive bond. 
E)  treasury bond. 
A)  debenture bond. 
B)  mortgage bond. 
C)  subordinated debenture. 
D)  preemptive bond. 
E)  treasury bond.

Question 4

In reality, there is no guarantee that convertible bondholders will convert to common stock even if the price of the common stock does increase.

Accepted Answer

A) True 
 B)False

Question 5

Which one of the following is a 'junk' bond?

Accepted Answer

A)  Treasury bond 
B)  Bond rated B by Standard and Poor's 
C)  Bond rated AAA by Standard and Poor's 
D)  Insured municipal bond 
E)  Treasury bill 
A)  Treasury bond 
B)  Bond rated B by Standard and Poor's 
C)  Bond rated AAA by Standard and Poor's 
D)  Insured municipal bond 
E)  Treasury bill

Question 6

According to Moody's, bonds with extremely poor prospects of attaining any real investment standing are rated:

Accepted Answer

A)  $75.00. 
B)  $88.00. 
C)  $88.75. 
D)  $887.50. 
E)  $1,000.00. 
A)  $75.00. 
B)  $88.00. 
C)  $88.75. 
D)  $887.50. 
E)  $1,000.00.

Question 7

Dick Dowen just bought a bond that is only secured by the full faith and credit of the issuer. What type of bond has Dick purchased?

Accepted Answer

A)  Debenture 
B)  Mortgage 
C)  Convertible 
D)  Callable 
E)  High-yield 
A)  Debenture 
B)  Mortgage 
C)  Convertible 
D)  Callable 
E)  High-yield

Question 8

All bonds in a serial bond issue mature on the same date.

Accepted Answer

A) True 
 B)False

Question 9

Which one of the following is issued by state and local governments?

Accepted Answer

A)  Treasury bond 
B)  Treasury bill 
C)  Municipal bond 
D)  Corporate bond 
E)  Common stock 
A)  Treasury bond 
B)  Treasury bill 
C)  Municipal bond 
D)  Corporate bond 
E)  Common stock

Question 10

Maturity dates for corporate bonds generally range from 5 to 10 years.

Accepted Answer

A) True 
 B)False

Question 11

The interest rate for a $1,000 bond is 6 percent. If comparable bonds are paying 8 percent, what is the approximate market value for of the 6 percent bond?

Accepted Answer

A)  $1,000 
B)  $800 
C)  $750 
D)  $600 
E)  $500 
A)  $1,000 
B)  $800 
C)  $750 
D)  $600 
E)  $500

Question 12

What is the current yield for a $1,000 corporate bond that pays 7 percent and has a current market value of $800?

Accepted Answer

A)  7.25 percent 
B)  8.10 percent 
C)  8.75 percent 
D)  10.00 percent 
E)  11.40 percent 
A)  7.25 percent 
B)  8.10 percent 
C)  8.75 percent 
D)  10.00 percent 
E)  11.40 percent

Question 13

If overall interest rates in the economy rise, a corporate bond with a fixed interest rate will generally:

Accepted Answer

A)  increase in value. 
B)  decrease in value. 
C)  remain unchanged. 
D)  become worthless. 
E)  be returned to the corporation. 
A)  increase in value. 
B)  decrease in value. 
C)  remain unchanged. 
D)  become worthless. 
E)  be returned to the corporation.

Question 14

Which one of the following statements is false?

Accepted Answer

A)  It is possible to obtain information about a corporation that issues a bond by accessing the corporation's home page on the internet. 
B)  Price information about corporate bonds is available on the internet. 
C)  You can research bonds online but you cannot trade them online. 
D)  There are fewer websites that provide information on bonds as compared to websites that provide information on stocks. 
E)  All of the other answers are true. 
A)  It is possible to obtain information about a corporation that issues a bond by accessing the corporation's home page on the internet. 
B)  Price information about corporate bonds is available on the internet. 
C)  You can research bonds online but you cannot trade them online. 
D)  There are fewer websites that provide information on bonds as compared to websites that provide information on stocks. 
E)  All of the other answers are true.

Question 15

Which of the following reasons explain why investors purchase bonds?

Accepted Answer

A)  To provide asset allocation 
B)  To produce income for current financial needs 
C)  To match maturity dates with future financial needs 
D)  To have a conservative investment during an economic downturn 
E)  Investors purchase bonds for all of these reasons. 
A)  To provide asset allocation 
B)  To produce income for current financial needs 
C)  To match maturity dates with future financial needs 
D)  To have a conservative investment during an economic downturn 
E)  Investors purchase bonds for all of these reasons.

Question 16

What is the approximate market value for of a $1,000 corporate bond that pays 9 percent interest when comparable bonds are paying 8 percent?

Accepted Answer

A)  $800 
B)  $900 
C)  $1,000 
D)  $1,125 
E)  $1,600 
A)  $800 
B)  $900 
C)  $1,000 
D)  $1,125 
E)  $1,600

Question 17

The commission for purchasing a $1,000 bond would most likely be:

Accepted Answer

A)  $0.50. 
B)  $1 to $2. 
C)  $5 to $35. 
D)  $35 to $50. 
E)  over $50. 
A)  $0.50. 
B)  $1 to $2. 
C)  $5 to $35. 
D)  $35 to $50. 
E)  over $50.

Question 18

You own a $1,000 bond that pays 9.25 percent interest. What is the amount of interest you will receive each six months?

Accepted Answer

A)  $4.62 
B)  $9.25 
C)  $92.50 
D)  $46.25 
E)  $23.13 
A)  $4.62 
B)  $9.25 
C)  $92.50 
D)  $46.25 
E)  $23.13

Question 19

Maturity dates for intermediate term corporate bonds generally range from 5 to ___ years.

Accepted Answer

A)  10 
B)  15 
C)  20 
D)  25 
E)  30 
A)  10 
B)  15 
C)  20 
D)  25 
E)  30

Question 20

The highest bond rating issued by Standard & Poor's is:

Accepted Answer

A)  AAA. 
B)  Aaa. 
C)  A+. 
D)  BB. 
E)  Aa. 
A)  AAA. 
B)  Aaa. 
C)  A+. 
D)  BB. 
E)  Aa.

Scott Turner has a bond with 10 years to maturity, a face value of $1,000, an 8% interest rate, and a market price of $800. What is the yield-to-maturity on this bond?

Today, bond ownership records are maintained using a process called:

A type of bond that is unsecured and gives bondholders a claim secondary to that of other designated bondholders with respect to both income and assets is called a:

In reality, there is no guarantee that convertible bondholders will convert to common stock even if the price of the common stock does increase.

Which one of the following is a 'junk' bond?

According to Moody's, bonds with extremely poor prospects of attaining any real investment standing are rated:

Dick Dowen just bought a bond that is only secured by the full faith and credit of the issuer. What type of bond has Dick purchased?

All bonds in a serial bond issue mature on the same date.

Which one of the following is issued by state and local governments?

Maturity dates for corporate bonds generally range from 5 to 10 years.

The interest rate for a $1,000 bond is 6 percent. If comparable bonds are paying 8 percent, what is the approximate market value for of the 6 percent bond?

What is the current yield for a $1,000 corporate bond that pays 7 percent and has a current market value of $800?

If overall interest rates in the economy rise, a corporate bond with a fixed interest rate will generally:

Which one of the following statements is false?

Which of the following reasons explain why investors purchase bonds?

What is the approximate market value for of a $1,000 corporate bond that pays 9 percent interest when comparable bonds are paying 8 percent?

The commission for purchasing a $1,000 bond would most likely be:

You own a $1,000 bond that pays 9.25 percent interest. What is the amount of interest you will receive each six months?

Maturity dates for intermediate term corporate bonds generally range from 5 to ___ years.

The highest bond rating issued by Standard & Poor's is:

Personal Finance Basics and the Time Value of Money

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Money Management Strategy: Financial Statements and Budgeting

Planning Your Tax Strategy

Financial Services: Savings Plans and Payment Accounts

Introduction to Consumer Credit

Choosing a Source of Credit: The Costs of Credit Alternatives

Consumer Purchasing Strategies and Legal Protection

The Housing Decision: Factors and Finances

Property and Motor Vehicle Insurance

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Exam 15: Investing in Bonds

Scott Turner has a bond with 10 years to maturity, a face value of $1,000, an 8% interest rate, and a market price of $800. What is the yield-to-maturity on this bond?

Today, bond ownership records are maintained using a process called:

A type of bond that is unsecured and gives bondholders a claim secondary to that of other designated bondholders with respect to both income and assets is called a:

In reality, there is no guarantee that convertible bondholders will convert to common stock even if the price of the common stock does increase.

Which one of the following is a 'junk' bond?

According to Moody's, bonds with extremely poor prospects of attaining any real investment standing are rated:

Dick Dowen just bought a bond that is only secured by the full faith and credit of the issuer. What type of bond has Dick purchased?

All bonds in a serial bond issue mature on the same date.

Which one of the following is issued by state and local governments?

Maturity dates for corporate bonds generally range from 5 to 10 years.

The interest rate for a $1,000 bond is 6 percent. If comparable bonds are paying 8 percent, what is the approximate market value for of the 6 percent bond?

What is the current yield for a $1,000 corporate bond that pays 7 percent and has a current market value of $800?

If overall interest rates in the economy rise, a corporate bond with a fixed interest rate will generally:

Which one of the following statements is false?

Which of the following reasons explain why investors purchase bonds?

What is the approximate market value for of a $1,000 corporate bond that pays 9 percent interest when comparable bonds are paying 8 percent?

The commission for purchasing a $1,000 bond would most likely be:

You own a $1,000 bond that pays 9.25 percent interest. What is the amount of interest you will receive each six months?

Maturity dates for intermediate term corporate bonds generally range from 5 to ___ years.

The highest bond rating issued by Standard & Poor's is:

Personal Finance Basics and the Time Value of Money

Financial Aspects of Career Planning

Money Management Strategy: Financial Statements and Budgeting

Planning Your Tax Strategy

Financial Services: Savings Plans and Payment Accounts

Introduction to Consumer Credit

Choosing a Source of Credit: The Costs of Credit Alternatives

Consumer Purchasing Strategies and Legal Protection

The Housing Decision: Factors and Finances

Property and Motor Vehicle Insurance

Health, Disability, and Long-Term Care Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Mutual Funds

Investing in Real Estate and Other Investment Alternatives

Starting Early: Retirement Planning

Estate Planning

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