Question 1

Which bond rating does Standard & Poor's assign to a bond that is in default?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
E) Z 
A) A 
B) B 
C) C 
D) D 
E) Z

Question 2

If a bond is quoted in the newspaper at 92,the current price of a $1,000 face value bond is:

Accepted Answer

A) $9.20. 
B) $92.00. 
C) $920.00. 
D) $1,000.00. 
E) $1,092.00. 
A) $9.20. 
B) $92.00. 
C) $920.00. 
D) $1,000.00. 
E) $1,092.00.

Question 3

Corporate bonds are a form of equity financing that does not have to be repaid.

Accepted Answer

A) True 
 B)False

Question 4

Which type of bond is not registered in the investor's name?

Accepted Answer

A) Revenue 
B) General obligation 
C) Bearer 
D) Zero-coupon 
E) Tax-exempt 
A) Revenue 
B) General obligation 
C) Bearer 
D) Zero-coupon 
E) Tax-exempt

Question 5

A corporate bond is a corporation's written pledge that it will repay a specified amount of money with interest.

Accepted Answer

A) True 
 B)False

Question 6

Although unpopular a few years back,more and more U.S.corporations are issuing bearer bonds.

Accepted Answer

A) True 
 B)False

Question 7

To ensure that it has sufficient funds available to redeem a bond issue,a corporation may issue ____________ bonds.

Accepted Answer

A) debenture 
B) mortgage 
C) sinking fund 
D) subordinate 
E) serial 
A) debenture 
B) mortgage 
C) sinking fund 
D) subordinate 
E) serial

Question 8

If your primary goal is current yield,which one of these bonds is the wiser investment? Bond A: $1,000 corporate bond that pays 7 percent and has a current market value of $800; or Bond B: $1,000 corporate bond that pays 8.25 percent and has a current market value of $950?

Accepted Answer

Bond A current yield = ($1,000

Question 9

The current yield on a corporate bond takes into account:

Accepted Answer

A) the bond's face amount. 
B) the interest rate paid by the bond. 
C) dollar amount of interest. 
D) current market value of the bond. 
E) All of these. 
A) the bond's face amount. 
B) the interest rate paid by the bond. 
C) dollar amount of interest. 
D) current market value of the bond. 
E) All of these.

Question 10

In addition to the stocks issued by the Treasury Department,debt securities are issued by federal agencies,including Fannie Mae,Ginnie Mae,and Freddie Mac.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

All bonds are issued with a stated face

Question 12

If the terms of the sinking fund provision are not met,the _____ may take legal action against the company on behalf of the bondholders.

Accepted Answer

A) bond parent 
B) arbitrator 
C) mediator 
D) trustee 
E) guardian 
A) bond parent 
B) arbitrator 
C) mediator 
D) trustee 
E) guardian

Question 13

Which of the following is a fund to which annual or semiannual deposits are made for the purpose of redeeming a bond issue?

Accepted Answer

A) call feature 
B) sinking fund 
C) deposit fund 
D) premium fund 
E) savings account 
A) call feature 
B) sinking fund 
C) deposit fund 
D) premium fund 
E) savings account

Question 14

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 15

A call feature:

Accepted Answer

A) allows bondholders to convert their bond to a specified number of shares of common stock. 
B) is not available on corporate bonds. 
C) allows the corporation to buy outstanding bonds from current bondholders before the maturity date. 
D) is only available with government securities. 
E) is guaranteed by the corporation. 
A) allows bondholders to convert their bond to a specified number of shares of common stock. 
B) is not available on corporate bonds. 
C) allows the corporation to buy outstanding bonds from current bondholders before the maturity date. 
D) is only available with government securities. 
E) is guaranteed by the corporation.

Question 16

XYZ Corporation wants to retire a $60 million bond issue before the maturity date.In order to call the bonds in this issue,the corporation must pay the bondholders the face value plus a premium.What is the typical premium for bonds that have been called?

Accepted Answer

A) $100 
B) $50-$100 
C) $20-$75 
D) $10-$25 
E) $1-$10 
A) $100 
B) $50-$100 
C) $20-$75 
D) $10-$25 
E) $1-$10

Question 17

If the approximate market value for of a $1,000 corporate bond is $1,125 and it pays 9 percent interest,then what are comparable bonds paying?

Accepted Answer

A) 1 percent 
B) 6 percent 
C) 7 percent 
D) 8 percent 
E) 9 percent 
A) 1 percent 
B) 6 percent 
C) 7 percent 
D) 8 percent 
E) 9 percent

Question 18

A government security issued in minimum units of $100 with maturities that are one year or less 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 19

Bond interest payments are a tax-deductible business expense.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following can be purchased through Treasury Direct at www.treasurydirect.gov ?

Accepted Answer

A) TIPS. 
B) Treasury bills. 
C) Treasury notes. 
D) Treasury bonds. 
E) ANSE.All of these. 
A) TIPS. 
B) Treasury bills. 
C) Treasury notes. 
D) Treasury bonds. 
E) ANSE.All of these.

Which bond rating does Standard & Poor's assign to a bond that is in default?

If a bond is quoted in the newspaper at 92,the current price of a $1,000 face value bond is:

Corporate bonds are a form of equity financing that does not have to be repaid.

Which type of bond is not registered in the investor's name?

A corporate bond is a corporation's written pledge that it will repay a specified amount of money with interest.

Although unpopular a few years back,more and more U.S.corporations are issuing bearer bonds.

To ensure that it has sufficient funds available to redeem a bond issue,a corporation may issue ____________ bonds.

If your primary goal is current yield,which one of these bonds is the wiser investment? Bond A: $1,000 corporate bond that pays 7 percent and has a current market value of $800; or Bond B: $1,000 corporate bond that pays 8.25 percent and has a current market value of $950?

The current yield on a corporate bond takes into account:

In addition to the stocks issued by the Treasury Department,debt securities are issued by federal agencies,including Fannie Mae,Ginnie Mae,and Freddie Mac.

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

If the terms of the sinking fund provision are not met,the _____ may take legal action against the company on behalf of the bondholders.

Which of the following is a fund to which annual or semiannual deposits are made for the purpose of redeeming a bond issue?

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

A call feature:

XYZ Corporation wants to retire a $60 million bond issue before the maturity date.In order to call the bonds in this issue,the corporation must pay the bondholders the face value plus a premium.What is the typical premium for bonds that have been called?

If the approximate market value for of a $1,000 corporate bond is $1,125 and it pays 9 percent interest,then what are comparable bonds paying?

A government security issued in minimum units of $100 with maturities that are one year or less is called a:

Bond interest payments are a tax-deductible business expense.

Which of the following can be purchased through Treasury Direct at www.treasurydirect.gov ?

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 Stock

Investing in Mutual Funds

Investing in Real Estate and Other Investment Alternatives

Starting Early: Retirement Planning

Estate Planning

Filters

Exam 15: Investing in Bonds

Which bond rating does Standard & Poor's assign to a bond that is in default?

If a bond is quoted in the newspaper at 92,the current price of a $1,000 face value bond is:

Corporate bonds are a form of equity financing that does not have to be repaid.

Which type of bond is not registered in the investor's name?

A corporate bond is a corporation's written pledge that it will repay a specified amount of money with interest.

Although unpopular a few years back,more and more U.S.corporations are issuing bearer bonds.

To ensure that it has sufficient funds available to redeem a bond issue,a corporation may issue ____________ bonds.

If your primary goal is current yield,which one of these bonds is the wiser investment? Bond A: $1,000 corporate bond that pays 7 percent and has a current market value of $800; or Bond B: $1,000 corporate bond that pays 8.25 percent and has a current market value of $950?

The current yield on a corporate bond takes into account:

In addition to the stocks issued by the Treasury Department,debt securities are issued by federal agencies,including Fannie Mae,Ginnie Mae,and Freddie Mac.

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

If the terms of the sinking fund provision are not met,the _____ may take legal action against the company on behalf of the bondholders.

Which of the following is a fund to which annual or semiannual deposits are made for the purpose of redeeming a bond issue?

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

A call feature:

XYZ Corporation wants to retire a $60 million bond issue before the maturity date.In order to call the bonds in this issue,the corporation must pay the bondholders the face value plus a premium.What is the typical premium for bonds that have been called?

If the approximate market value for of a $1,000 corporate bond is $1,125 and it pays 9 percent interest,then what are comparable bonds paying?

A government security issued in minimum units of $100 with maturities that are one year or less is called a:

Bond interest payments are a tax-deductible business expense.

Which of the following can be purchased through Treasury Direct at www.treasurydirect.gov ?

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 Stock

Investing in Mutual Funds

Investing in Real Estate and Other Investment Alternatives

Starting Early: Retirement Planning

Estate Planning

Filters