Question 1

If comparable bonds are paying 8 percent and the approximate market value of a $1,000 bond is $750,then what is the annual interest on the bond?

Accepted Answer

A) $30 
B) $60 
C) $75 
D) $80 
E) $100 
A) $30 
B) $60 
C) $75 
D) $80 
E) $100

Question 2

Why do corporations sell bonds?

Accepted Answer

A) To improve their financial leverage 
B) To pay for major purchases 
C) Because they are finding it difficult or impossible to sell stock 
D) Because the interest is tax-deductible 
E) All of these 
A) To improve their financial leverage 
B) To pay for major purchases 
C) Because they are finding it difficult or impossible to sell stock 
D) Because the interest is tax-deductible 
E) All of these

Question 3

An issue of serial bonds:

Accepted Answer

A) will pay no interest payments. 
B) will have varying issue dates. 
C) will have a series of maturity dates. 
D) cannot be called. 
E) will all mature ten years from the date of issue. 
A) will pay no interest payments. 
B) will have varying issue dates. 
C) will have a series of maturity dates. 
D) cannot be called. 
E) will all mature ten years from the date of issue.

Question 4

For Moody's and Standard & Poor's,the first _____ bond-rating categories represent investments suitable for conservative investors who want a safe investment that provides a predictable source of income.

Accepted Answer

A) two 
B) three 
C) four 
D) five 
E) six 
A) two 
B) three 
C) four 
D) five 
E) six

Question 5

Today,almost all 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 6

High-yield (junk)bonds are sold by companies:

Accepted Answer

A) with a poor earnings history. 
B) with a questionable credit record. 
C) with lower ratings by major rating services. 
D) that are newer and have unproven ability to increase sales and earn profits. 
E) All of these. 
A) with a poor earnings history. 
B) with a questionable credit record. 
C) with lower ratings by major rating services. 
D) that are newer and have unproven ability to increase sales and earn profits. 
E) All of these.

Question 7

If a bond is quoted in the newspaper at 105,the current price of a $1,000 face value bond is:

Accepted Answer

A) $50.00. 
B) $95.00. 
C) $950.00. 
D) $1,050.00 . 
E) $1,000.00. 
A) $50.00. 
B) $95.00. 
C) $950.00. 
D) $1,050.00 . 
E) $1,000.00.

Question 8

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

Accepted Answer

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

Question 9

A subordinated debenture is a more secure investment than a mortgage bond.

Accepted Answer

A) True 
 B)False

Question 10

The ______ is the dollar amount the bondholder will receive at the bond's maturity.

Accepted Answer

A) annual interest. 
B) semiannual interest. 
C) premium. 
D) face value 
E) commission. 
A) annual interest. 
B) semiannual interest. 
C) premium. 
D) face value 
E) commission.

Question 11

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

Accepted Answer

A) $80 
B) $90 
C) $889 
D) $1,000 
E) $1,125 
A) $80 
B) $90 
C) $889 
D) $1,000 
E) $1,125

Question 12

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 website 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) Many of the better bond websites charge a fee to access their research, 
A) It is possible to obtain information about a corporation that issues a bond by accessing the corporation's website 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) Many of the better bond websites charge a fee to access their research,

Question 13

A type of bond that is unsecured and gives bondholders a claim secondary to that of other designated bondholders with respect to interest payments,repayment,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 14

Which of the following is the process of spreading your money among several different types of investments to lessen risk.

Accepted Answer

A) book entry 
B) professional management 
C) asset allocation 
D) bond laddering 
E) dollar appreciation 
A) book entry 
B) professional management 
C) asset allocation 
D) bond laddering 
E) dollar appreciation

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

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 17

The minimum price at which a seller is willing to receive for a government security is known as the ____________ price.

Accepted Answer

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

Question 18

A bond that is backed only by the reputation of the issuing corporation is called a ____________ bond.

Accepted Answer

A) debenture 
B) mortgage 
C) indenture 
D) preemptive 
E) treasury 
A) debenture 
B) mortgage 
C) indenture 
D) preemptive 
E) treasury

Question 19

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

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 20

The financially independent firm that acts as the bondholders' representative is the:

Accepted Answer

A) chairman of the board. 
B) president of the corporation. 
C) debenture holder. 
D) indenture holder. 
E) trustee. 
A) chairman of the board. 
B) president of the corporation. 
C) debenture holder. 
D) indenture holder. 
E) trustee.

If comparable bonds are paying 8 percent and the approximate market value of a $1,000 bond is $750,then what is the annual interest on the bond?

Why do corporations sell bonds?

An issue of serial bonds:

For Moody's and Standard & Poor's,the first _____ bond-rating categories represent investments suitable for conservative investors who want a safe investment that provides a predictable source of income.

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

High-yield (junk)bonds are sold by companies:

If a bond is quoted in the newspaper at 105,the current price of a $1,000 face value bond is:

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

A subordinated debenture is a more secure investment than a mortgage bond.

The ______ is the dollar amount the bondholder will receive at the bond's maturity.

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

Which one of the following statements is false?

A type of bond that is unsecured and gives bondholders a claim secondary to that of other designated bondholders with respect to interest payments,repayment,and assets is called a:

Which of the following is the process of spreading your money among several different types of investments to lessen risk.

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

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

The minimum price at which a seller is willing to receive for a government security is known as the ____________ price.

A bond that is backed only by the reputation of the issuing corporation is called a ____________ bond.

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

The financially independent firm that acts as the bondholders' representative is the:

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

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Investing in Stock

Investing in Mutual Funds

Investing in Real Estate and Other Investment Alternatives

Starting Early: Retirement Planning

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Exam 15: Investing in Bonds

If comparable bonds are paying 8 percent and the approximate market value of a $1,000 bond is $750,then what is the annual interest on the bond?

Why do corporations sell bonds?

An issue of serial bonds:

For Moody's and Standard & Poor's,the first _____ bond-rating categories represent investments suitable for conservative investors who want a safe investment that provides a predictable source of income.

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

High-yield (junk)bonds are sold by companies:

If a bond is quoted in the newspaper at 105,the current price of a $1,000 face value bond is:

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

A subordinated debenture is a more secure investment than a mortgage bond.

The ______ is the dollar amount the bondholder will receive at the bond's maturity.

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

Which one of the following statements is false?

A type of bond that is unsecured and gives bondholders a claim secondary to that of other designated bondholders with respect to interest payments,repayment,and assets is called a:

Which of the following is the process of spreading your money among several different types of investments to lessen risk.

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

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

The minimum price at which a seller is willing to receive for a government security is known as the ____________ price.

A bond that is backed only by the reputation of the issuing corporation is called a ____________ bond.

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

The financially independent firm that acts as the bondholders' representative is the:

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