Question 1

Tax-exempt bonds offer slightly higher interest rates than corporate bonds.

Accepted Answer

A) True 
 B)False

Question 2

The only way an investor can make money on a bond investment is to hold the bond until maturity.

Accepted Answer

A) True 
 B)False

Question 3

The interest rate for a $1,000 bond is 9 percent. If comparable bonds are paying 7 percent, what is the approximate market value for of the 9 percent bond?

Accepted Answer

A)  $1,286 
B)  $1,090 
C)  $1,000 
D)  $900 
E)  $700 
A)  $1,286 
B)  $1,090 
C)  $1,000 
D)  $900 
E)  $700

Question 4

For government bonds, the price that a dealer is willing to pay for a government security is called the:

Accepted Answer

A)  dirty price. 
B)  asked price. 
C)  bid price. 
D)  clean price. 
E)  None of these. 
A)  dirty price. 
B)  asked price. 
C)  bid price. 
D)  clean price. 
E)  None of these.

Question 5

Elizabeth Cherry has a bond that has 10 years to maturity, a face value of $1,000, an 8% interest rate, and a market price of $1,200. What is the yield-to-maturity on this bond?

Accepted Answer

A)  4.98 percent 
B)  5.46 percent 
C)  6.22 percent 
D)  8.00 percent 
E)  9.09 percent 
A)  4.98 percent 
B)  5.46 percent 
C)  6.22 percent 
D)  8.00 percent 
E)  9.09 percent

Question 6

Doug Emery purchased a bond that can be exchanged for a set number of shares of the issuer's common stock. What type of bond has Doug purchased?

Accepted Answer

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

Question 7

A registered bond is a bond whose ownership is registered in the owner's name by the issuing company.

Accepted Answer

A) True 
 B)False

Question 8

Which one of the following bonds would likely have the lowest risk?

Accepted Answer

A)  Treasury bill 
B)  Municipal bond 
C)  Corporate bond 
D)  Government agency bond 
E)  Junk bond 
A)  Treasury bill 
B)  Municipal bond 
C)  Corporate bond 
D)  Government agency bond 
E)  Junk bond

Question 9

How do interest rates in the economy affect the price of a corporate bond?

Accepted Answer

The answer of How do interest rates in the economy...

Question 10

Which one of the following statements is true?

Accepted Answer

A)  All local newspapers contain information on bond prices. 
B)  In bond quotations, prices are given as a percentage of the bond's face value. 
C)  The face value for most corporate bonds is $5,000. 
D)  To find the market price of a corporate bond, you must contact the corporation that originally issued the bond. 
E)  To find the market price of a corporate bond, you must call a stockbroker. 
A)  All local newspapers contain information on bond prices. 
B)  In bond quotations, prices are given as a percentage of the bond's face value. 
C)  The face value for most corporate bonds is $5,000. 
D)  To find the market price of a corporate bond, you must contact the corporation that originally issued the bond. 
E)  To find the market price of a corporate bond, you must call a stockbroker.

Question 11

A $l,000 corporate bond is convertible to 25 shares of the corporation's common stock. What is the minimum price that the stock must obtain before bondholders would consider converting the bond to stock?

Accepted Answer

A)  $10 
B)  $20 
C)  $30 
D)  $40 
E)  $50 
A)  $10 
B)  $20 
C)  $30 
D)  $40 
E)  $50

Question 12

If overall interest rates in the economy fall, 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 13

June Tavia is trying to calculate the taxable equivalent yield for a municipal bond. If the bond she owns pays 4.5 percent interest and she is in the 25 percent tax bracket, what is the taxable-equivalent yield?

Accepted Answer

A)  4.50 percent 
B)  5.50 percent 
C)  6.00 percent 
D)  7.72 percent 
E)  6.93 percent 
A)  4.50 percent 
B)  5.50 percent 
C)  6.00 percent 
D)  7.72 percent 
E)  6.93 percent

Question 14

Assume that you purchase a $1,000 corporate bond that pays 9.25 percent interest. What is the amount of interest that you receive each year?

Accepted Answer

A)  $1,000.00 
B)  $92.50 
C)  $92.00 
D)  $90.00 
E)  $9.25 
A)  $1,000.00 
B)  $92.50 
C)  $92.00 
D)  $90.00 
E)  $9.25

Question 15

A government security issued in minimum units of $100 with a 30-year maturity is called a:

Accepted Answer

A)  subordinated bond. 
B)  Treasury bill. 
C)  Treasury note. 
D)  Treasury bond. 
E)  savings bond. 
A)  subordinated bond. 
B)  Treasury bill. 
C)  Treasury note. 
D)  Treasury bond. 
E)  savings bond.

Question 16

Which of the following statements is not true about Treasury Inflation-Protected Securities (TIPS)?

Accepted Answer

A)  They are currently sold with 5-, 10-, and 30-year maturities. 
B)  The amount of principal increases with inflation and decreases with deflation. 
C)  They pay interest twice a year, at a fixed rate. 
D)  They can be held until maturity or sold before maturity. 
E)  Interest income and growth in principal are exempt from federal income tax. 
A)  They are currently sold with 5-, 10-, and 30-year maturities. 
B)  The amount of principal increases with inflation and decreases with deflation. 
C)  They pay interest twice a year, at a fixed rate. 
D)  They can be held until maturity or sold before maturity. 
E)  Interest income and growth in principal are exempt from federal income tax.

Question 17

The price at which a dealer is willing to sell a government security is known as the ____________ price.

Accepted Answer

A)  bid 
B)  asked 
C)  contract 
D)  government 
E)  adjusted 
A)  bid 
B)  asked 
C)  contract 
D)  government 
E)  adjusted

Question 18

Treasury bonds are issued in $5,000 units with 10-year maturities.
T-bonds are issued in minimum units of $100 that have a 30-year maturity.

Accepted Answer

A) True 
 B)False

Question 19

For government bonds, the bid price is the price that a dealer is willing to pay for a government security.

Accepted Answer

A) True 
 B)False

Question 20

The highest bond rating issued by Moody's is:

Accepted Answer

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

Tax-exempt bonds offer slightly higher interest rates than corporate bonds.

The only way an investor can make money on a bond investment is to hold the bond until maturity.

The interest rate for a $1,000 bond is 9 percent. If comparable bonds are paying 7 percent, what is the approximate market value for of the 9 percent bond?

For government bonds, the price that a dealer is willing to pay for a government security is called the:

Elizabeth Cherry has a bond that has 10 years to maturity, a face value of $1,000, an 8% interest rate, and a market price of $1,200. What is the yield-to-maturity on this bond?

Doug Emery purchased a bond that can be exchanged for a set number of shares of the issuer's common stock. What type of bond has Doug purchased?

A registered bond is a bond whose ownership is registered in the owner's name by the issuing company.

Which one of the following bonds would likely have the lowest risk?

How do interest rates in the economy affect the price of a corporate bond?

Which one of the following statements is true?

A $l,000 corporate bond is convertible to 25 shares of the corporation's common stock. What is the minimum price that the stock must obtain before bondholders would consider converting the bond to stock?

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

June Tavia is trying to calculate the taxable equivalent yield for a municipal bond. If the bond she owns pays 4.5 percent interest and she is in the 25 percent tax bracket, what is the taxable-equivalent yield?

Assume that you purchase a $1,000 corporate bond that pays 9.25 percent interest. What is the amount of interest that you receive each year?

A government security issued in minimum units of $100 with a 30-year maturity is called a:

Which of the following statements is not true about Treasury Inflation-Protected Securities (TIPS)?

The price at which a dealer is willing to sell a government security is known as the ____________ price.

Treasury bonds are issued in $5,000 units with 10-year maturities. T-bonds are issued in minimum units of $100 that have a 30-year maturity.

For government bonds, the bid price is the price that a dealer is willing to pay for a government security.

The highest bond rating issued by Moody'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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Exam 15: Investing in Bonds

Tax-exempt bonds offer slightly higher interest rates than corporate bonds.

The only way an investor can make money on a bond investment is to hold the bond until maturity.

The interest rate for a $1,000 bond is 9 percent. If comparable bonds are paying 7 percent, what is the approximate market value for of the 9 percent bond?

For government bonds, the price that a dealer is willing to pay for a government security is called the:

Elizabeth Cherry has a bond that has 10 years to maturity, a face value of $1,000, an 8% interest rate, and a market price of $1,200. What is the yield-to-maturity on this bond?

Doug Emery purchased a bond that can be exchanged for a set number of shares of the issuer's common stock. What type of bond has Doug purchased?

A registered bond is a bond whose ownership is registered in the owner's name by the issuing company.

Which one of the following bonds would likely have the lowest risk?

How do interest rates in the economy affect the price of a corporate bond?

Which one of the following statements is true?

A $l,000 corporate bond is convertible to 25 shares of the corporation's common stock. What is the minimum price that the stock must obtain before bondholders would consider converting the bond to stock?

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

June Tavia is trying to calculate the taxable equivalent yield for a municipal bond. If the bond she owns pays 4.5 percent interest and she is in the 25 percent tax bracket, what is the taxable-equivalent yield?

Assume that you purchase a $1,000 corporate bond that pays 9.25 percent interest. What is the amount of interest that you receive each year?

A government security issued in minimum units of $100 with a 30-year maturity is called a:

Which of the following statements is not true about Treasury Inflation-Protected Securities (TIPS)?

The price at which a dealer is willing to sell a government security is known as the ____________ price.

Treasury bonds are issued in $5,000 units with 10-year maturities. T-bonds are issued in minimum units of $100 that have a 30-year maturity.

For government bonds, the bid price is the price that a dealer is willing to pay for a government security.

The highest bond rating issued by Moody'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

Filters