Question 1

A STRIPS has a yield to maturity of 6.2 percent,a par value of $25,000,and a time to maturity of 10 years.What is the price?

Accepted Answer

A)  $4,100.87 
B)  $5,792.80 
C)  $9,967.50 
D)  $10,698.08 
E)  $13,575.84 
A)  $4,100.87 
B)  $5,792.80 
C)  $9,967.50 
D)  $10,698.08 
E)  $13,575.84

Question 2

The Federal Reserve is offering Treasury bills with a par value of $25 billion for sale.They have received $7 billion of noncompetitive bids.The competitive bids for a $10,000 par value bond are: (Qty in billions)   What price will Bidder A pay per bond,assuming that bid is accepted?

Accepted Answer

A)  $9,600 
B)  $9,650 
C)  $9,675 
D)  $9,700 
E)  $9,750 
A)  $9,600 
B)  $9,650 
C)  $9,675 
D)  $9,700 
E)  $9,750

Question 3

Which one of the following features of corporate bonds has the greatest appeal to pension fund investors?

Accepted Answer

A)  call provision 
B)  convertible provision 
C)  zero repayment risk 
D)  prospectus availability 
E)  predictable cash flows 
A)  call provision 
B)  convertible provision 
C)  zero repayment risk 
D)  prospectus availability 
E)  predictable cash flows

Question 4

A $1,000 Treasury note has 4.5 years left to maturity,a yield to maturity of 4.25 percent,and a coupon rate of 4.50 percent.What is the price of the bond?

Accepted Answer

A)  $1,007.83 
B)  $1,008.53 
C)  $1,009.56 
D)  $1,010.14 
E)  $1,011.96 
A)  $1,007.83 
B)  $1,008.53 
C)  $1,009.56 
D)  $1,010.14 
E)  $1,011.96

Question 5

Lester is considering a municipal bond yielding 5.5 percent and a corporate bond yielding 8.2 percent.His marginal tax rate is 28 percent.He should invest in the ________ bond because the critical marginal tax rate is ________ percent.

Accepted Answer

A)  corporate; 26 
B)  corporate; 29 
C)  corporate; 33 
D)  municipal; 35 
E)  municipal; 37 
A)  corporate; 26 
B)  corporate; 29 
C)  corporate; 33 
D)  municipal; 35 
E)  municipal; 37

Question 6

What is the document called that is distributed to potential bondholders and provides detailed information on the financial position and operations of the bond issuer?

Accepted Answer

A)  indenture summary 
B)  prospectus 
C)  trust statement 
D)  10K 
E)  10Q 
A)  indenture summary 
B)  prospectus 
C)  trust statement 
D)  10K 
E)  10Q

Question 7

What price will a noncompetitive bidder pay for a security being purchased through a U.S.Treasury auction?

Accepted Answer

A)  highest competitive bid price 
B)  highest noncompetitive bid price 
C)  stop-out bid price 
D)  average of all bid prices 
E)  lowest competitive bid price 
A)  highest competitive bid price 
B)  highest noncompetitive bid price 
C)  stop-out bid price 
D)  average of all bid prices 
E)  lowest competitive bid price

Question 8

The entire formal contract between a bond issuer and the bondholders is found in which one of the following documents?

Accepted Answer

A)  prospectus 
B)  prospectus summary 
C)  indenture agreement 
D)  indenture summary 
E)  trust certificate 
A)  prospectus 
B)  prospectus summary 
C)  indenture agreement 
D)  indenture summary 
E)  trust certificate

Question 9

A bond has a par value of $1,000 and a market value of $833.40.The conversion price is $45.45.What is the conversion ratio?

Accepted Answer

A)  21 
B)  22 
C)  23 
D)  24 
E)  25 
A)  21 
B)  22 
C)  23 
D)  24 
E)  25

Question 10

What is the conversion ratio of a $1,000 par value bond that is selling for $888.96 and has a conversion price of $66.67?

Accepted Answer

A)  15 
B)  16 
C)  17 
D)  18 
E)  19 
A)  15 
B)  16 
C)  17 
D)  18 
E)  19

Question 11

Which of the following are common characteristics associated with corporate bonds?
I.specified cash flows
II.equity ownership
III.call feature
IV.set maturity date

Accepted Answer

A)  I and II only 
B)  I and IV only 
C)  II and III only 
D)  I, II, and IV only 
E)  I, III, and IV only 
A)  I and II only 
B)  I and IV only 
C)  II and III only 
D)  I, II, and IV only 
E)  I, III, and IV only

Question 12

Which one of the following generally applies to municipal bonds?

Accepted Answer

A)  noncallable 
B)  risk-free 
C)  high credit rating 
D)  zero coupon 
E)  par value of $1,000 
A)  noncallable 
B)  risk-free 
C)  high credit rating 
D)  zero coupon 
E)  par value of $1,000

A STRIPS has a yield to maturity of 6.2 percent,a par value of $25,000,and a time to maturity of 10 years.What is the price?

The Federal Reserve is offering Treasury bills with a par value of $25 billion for sale.They have received $7 billion of noncompetitive bids.The competitive bids for a $10,000 par value bond are: (Qty in billions) What price will Bidder A pay per bond,assuming that bid is accepted?

Which one of the following features of corporate bonds has the greatest appeal to pension fund investors?

A $1,000 Treasury note has 4.5 years left to maturity,a yield to maturity of 4.25 percent,and a coupon rate of 4.50 percent.What is the price of the bond?

Lester is considering a municipal bond yielding 5.5 percent and a corporate bond yielding 8.2 percent.His marginal tax rate is 28 percent.He should invest in the bond because the critical marginal tax rate is percent.

What is the document called that is distributed to potential bondholders and provides detailed information on the financial position and operations of the bond issuer?

What price will a noncompetitive bidder pay for a security being purchased through a U.S.Treasury auction?

The entire formal contract between a bond issuer and the bondholders is found in which one of the following documents?

A bond has a par value of $1,000 and a market value of $833.40.The conversion price is $45.45.What is the conversion ratio?

What is the conversion ratio of a $1,000 par value bond that is selling for $888.96 and has a conversion price of $66.67?

Which of the following are common characteristics associated with corporate bonds? I.specified cash flows II.equity ownership III.call feature IV.set maturity date

Which one of the following generally applies to municipal bonds?

A Brief History of Risk and Return

The Investment Process

Overview of Security Types

Mutual Funds and Other Investment Companies

The Stock Market

Common Stock Valuation

Stock Price Behavior and Market Efficiency

Behavioral Finance and the Psychology of Investing

Interest Rates

Bond Prices and Yields

Diversification and Risky Asset Allocation

Return,Risk,and the Security Market Line

Performance Evaluation and Risk Management

Futures Contracts

Stock Options

Option Valuation

Projecting Cash Flow and Earnings

Global Economic Activity and Industry Analysis

Mortgage-Backed Securities

Filters

Exam 18: Corporate and Government Bonds

A STRIPS has a yield to maturity of 6.2 percent,a par value of $25,000,and a time to maturity of 10 years.What is the price?

The Federal Reserve is offering Treasury bills with a par value of $25 billion for sale.They have received $7 billion of noncompetitive bids.The competitive bids for a $10,000 par value bond are: (Qty in billions) What price will Bidder A pay per bond,assuming that bid is accepted?

Which one of the following features of corporate bonds has the greatest appeal to pension fund investors?

A $1,000 Treasury note has 4.5 years left to maturity,a yield to maturity of 4.25 percent,and a coupon rate of 4.50 percent.What is the price of the bond?

Lester is considering a municipal bond yielding 5.5 percent and a corporate bond yielding 8.2 percent.His marginal tax rate is 28 percent.He should invest in the ________ bond because the critical marginal tax rate is ________ percent.

What is the document called that is distributed to potential bondholders and provides detailed information on the financial position and operations of the bond issuer?

What price will a noncompetitive bidder pay for a security being purchased through a U.S.Treasury auction?

The entire formal contract between a bond issuer and the bondholders is found in which one of the following documents?

A bond has a par value of $1,000 and a market value of $833.40.The conversion price is $45.45.What is the conversion ratio?

What is the conversion ratio of a $1,000 par value bond that is selling for $888.96 and has a conversion price of $66.67?

Which of the following are common characteristics associated with corporate bonds? I.specified cash flows II.equity ownership III.call feature IV.set maturity date

Which one of the following generally applies to municipal bonds?

A Brief History of Risk and Return

The Investment Process

Overview of Security Types

Mutual Funds and Other Investment Companies

The Stock Market

Common Stock Valuation

Stock Price Behavior and Market Efficiency

Behavioral Finance and the Psychology of Investing

Interest Rates

Bond Prices and Yields

Diversification and Risky Asset Allocation

Return,Risk,and the Security Market Line

Performance Evaluation and Risk Management

Futures Contracts

Stock Options

Option Valuation

Projecting Cash Flow and Earnings

Global Economic Activity and Industry Analysis

Mortgage-Backed Securities

Filters

Lester is considering a municipal bond yielding 5.5 percent and a corporate bond yielding 8.2 percent.His marginal tax rate is 28 percent.He should invest in the bond because the critical marginal tax rate is percent.