Question 1

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 2

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 3

A fund to which annual or semiannual deposits are made for the purpose of redeeming a bond issue is called a(n)____________ fund.

Accepted Answer

A) serial 
B) sinking 
C) debenture 
D) indenture 
E) money 
A) serial 
B) sinking 
C) debenture 
D) indenture 
E) money

Question 4

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 5

A convertible bond:

Accepted Answer

A) pays both interest and dividends simultaneously. 
B) pays no interest payments. 
C) can be repurchased by the issuer prior to maturity. 
D) can be exchanged for a set number of shares of common stock. 
E) is secured by the FDIC. 
A) pays both interest and dividends simultaneously. 
B) pays no interest payments. 
C) can be repurchased by the issuer prior to maturity. 
D) can be exchanged for a set number of shares of common stock. 
E) is secured by the FDIC.

Question 6

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 7

The quality rating given by Standard & Poor's to highly-speculative bonds is:

Accepted Answer

A) high-grade. 
B) default. 
C) investment-grade. 
D) medium-grade. 
E) unrated. 
A) high-grade. 
B) default. 
C) investment-grade. 
D) medium-grade. 
E) unrated.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Why do corporations sell bonds?

Accepted Answer

A) To improve the firm's 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) For all of the reasons listed in the other answers. 
A) To improve the firm's 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) For all of the reasons listed in the other answers.

Question 10

Insured municipal bonds offer slightly lower interest rates than uninsured bonds because of the reduced risk of default.

Accepted Answer

A) True 
 B)False

Question 11

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 12

Bonds of a single issue that mature on different dates are called ____________ 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 13

If overall interest rates in the economy fall,then a corporate bond with a fixed interest rate will decrease in value.

Accepted Answer

A) True 
 B)False

Question 14

Treasury bills:

Accepted Answer

A) are rated by Moody's. 
B) pay interest every six months. 
C) are long-term securities issued by the federal government. 
D) are discounted securities. 
E) pay a higher interest rate than corporate bonds. 
A) are rated by Moody's. 
B) pay interest every six months. 
C) are long-term securities issued by the federal government. 
D) are discounted securities. 
E) pay a higher interest rate than corporate bonds.

Question 15

A corporate bond that is secured by various assets of the issuing firm is called a(n)____________ bond.

Accepted Answer

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

Question 16

Bond interest payments are a tax-deductible business expense.

Accepted Answer

A) True 
 B)False

Question 17

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 18

Investors purchase corporate bonds for:

Accepted Answer

A) interest income. 
B) possible increase in value. 
C) repayment at maturity. 
D) all of the other features listed 
E) none of the other features listed 
A) interest income. 
B) possible increase in value. 
C) repayment at maturity. 
D) all of the other features listed 
E) none of the other features listed

Question 19

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 20

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

Accepted Answer

A) True 
 B)False

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?

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

A fund to which annual or semiannual deposits are made for the purpose of redeeming a bond issue is called a(n)____________ fund.

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

A convertible bond:

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?

The quality rating given by Standard & Poor's to highly-speculative bonds is:

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

Why do corporations sell bonds?

Insured municipal bonds offer slightly lower interest rates than uninsured bonds because of the reduced risk of default.

A call feature:

Bonds of a single issue that mature on different dates are called ____________ bonds.

If overall interest rates in the economy fall,then a corporate bond with a fixed interest rate will decrease in value.

Treasury bills:

A corporate bond that is secured by various assets of the issuing firm is called a(n)____________ bond.

Bond interest payments are a tax-deductible business expense.

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?

Investors purchase corporate bonds for:

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

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

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

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?

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

A fund to which annual or semiannual deposits are made for the purpose of redeeming a bond issue is called a(n)____________ fund.

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

A convertible bond:

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?

The quality rating given by Standard & Poor's to highly-speculative bonds is:

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

Why do corporations sell bonds?

Insured municipal bonds offer slightly lower interest rates than uninsured bonds because of the reduced risk of default.

A call feature:

Bonds of a single issue that mature on different dates are called ____________ bonds.

If overall interest rates in the economy fall,then a corporate bond with a fixed interest rate will decrease in value.

Treasury bills:

A corporate bond that is secured by various assets of the issuing firm is called a(n)____________ bond.

Bond interest payments are a tax-deductible business expense.

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?

Investors purchase corporate bonds for:

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

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

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