Question 1

Corporate and Treasury bonds generally produce more interest revenue than municipal bonds.Why do investors choose to buy municipal bonds?

Accepted Answer

The answer of Corporate and Treasury bonds generally produce more...

Question 2

Treasury bills are issued in minimum units of $10,000 with maturities that range from 10 to 30 years.

Accepted Answer

A) True 
 B)False

Question 3

Tom McCallister buys a bond that the company can retire before maturity if they wish.What type of bond has Tom purchased?

Accepted Answer

A) debenture bond 
B) subordinated debenture bond 
C) convertible bond 
D) callable bond 
E) high-yield bond 
A) debenture bond 
B) subordinated debenture bond 
C) convertible bond 
D) callable bond 
E) high-yield bond

Question 4

The financially independent firm or individual 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.

Question 5

The current yield for a bond is determined by dividing the annual income amount by the current market value.

Accepted Answer

A) True 
 B)False

Question 6

In reality,there is no guarantee that convertible bondholders will convert to common stock even if the price of the common stock does increase.

Accepted Answer

A) True 
 B)False

Question 7

Treasury notes are issued in $100 units with a maturity of more than 1 year,but not more than 10 years.

Accepted Answer

A) True 
 B)False

Question 8

Because bonds are considered debt financing that must be repaid at maturity,the corporation's financial stability has little effect on the bond's value between the issue date and the maturity date.

Accepted Answer

A) True 
 B)False

Question 9

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 10

Which one of the following statements is correct?

Accepted Answer

A) Stock is a form of debt capital. 
B) Stock must be repaid at maturity. 
C) Bonds are a form of debt capital. 
D) Bonds do not have to be repaid at maturity. 
E) Interest payments to bondholders must be declared by the board of directors. 
A) Stock is a form of debt capital. 
B) Stock must be repaid at maturity. 
C) Bonds are a form of debt capital. 
D) Bonds do not have to be repaid at maturity. 
E) Interest payments to bondholders must be declared by the board of directors.

Question 11

Interest payments for registered bonds are usually mailed directly to the bondholder of record.

Accepted Answer

A) True 
 B)False

Question 12

The legal conditions for a corporate bond are described in the:

Accepted Answer

A) trustee contract. 
B) bondholder's covenant. 
C) corporate charter. 
D) bond indenture. 
E) bond debenturE. 
A) trustee contract. 
B) bondholder's covenant. 
C) corporate charter. 
D) bond indenture. 
E) bond debenturE.

Question 13

The interest rate for a $1,000 bond is 6 percent.If comparable bonds are paying 8 percent,what is the approximate market value for of the 6 percent bond?

Accepted Answer

A) $1,000 
B) $800 
C) $750 
D) $600 
E) $500 
A) $1,000 
B) $800 
C) $750 
D) $600 
E) $500

Question 14

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 15

Generally,U.S.government securities issued by the Treasury Department:

Accepted Answer

A) are not graded because they are risk free for practical purposes. 
B) receive the Standard & Poor's AAA rating. 
C) receive the Moody's Aaa rating. 
D) receive The Wall Street Journal's U.S.Government rating. 
E) receive the Treasury Department's "risk-free" rating. 
A) are not graded because they are risk free for practical purposes. 
B) receive the Standard & Poor's AAA rating. 
C) receive the Moody's Aaa rating. 
D) receive The Wall Street Journal's U.S.Government rating. 
E) receive the Treasury Department's "risk-free" rating.

Question 16

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 17

Which one of the following is issued by state and local governments?

Accepted Answer

A) Treasury bond 
B) Treasury bill 
C) municipal bond 
D) corporate bond 
E) common stock 
A) Treasury bond 
B) Treasury bill 
C) municipal bond 
D) corporate bond 
E) common stock

Question 18

Dave Johnson's objective was to purchase a government bond that provided some protection against inflation and higher prices.To fulfill this objective,John purchased a:

Accepted Answer

A) T-bill. 
B) T-note. 
C) T-bond. 
D) TIPS. 
E) general obligation bond. 
A) T-bill. 
B) T-note. 
C) T-bond. 
D) TIPS. 
E) general obligation bond.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Which type of bond would provide the most price stability?

Accepted Answer

A) discount 
B) short-term 
C) long-term 
D) speculative 
E) zero-coupon 
A) discount 
B) short-term 
C) long-term 
D) speculative 
E) zero-coupon

Corporate and Treasury bonds generally produce more interest revenue than municipal bonds.Why do investors choose to buy municipal bonds?

Treasury bills are issued in minimum units of $10,000 with maturities that range from 10 to 30 years.

Tom McCallister buys a bond that the company can retire before maturity if they wish.What type of bond has Tom purchased?

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

The current yield for a bond is determined by dividing the annual income amount by the current market value.

In reality,there is no guarantee that convertible bondholders will convert to common stock even if the price of the common stock does increase.

Treasury notes are issued in $100 units with a maturity of more than 1 year,but not more than 10 years.

Because bonds are considered debt financing that must be repaid at maturity,the corporation's financial stability has little effect on the bond's value between the issue date and the maturity date.

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

Which one of the following statements is correct?

Interest payments for registered bonds are usually mailed directly to the bondholder of record.

The legal conditions for a corporate bond are described in the:

The interest rate for a $1,000 bond is 6 percent.If comparable bonds are paying 8 percent,what is the approximate market value for of the 6 percent bond?

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?

Generally,U.S.government securities issued by the Treasury Department:

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

Which one of the following is issued by state and local governments?

Dave Johnson's objective was to purchase a government bond that provided some protection against inflation and higher prices.To fulfill this objective,John purchased a:

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

Which type of bond would provide the most price stability?

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

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Exam 15: Investing in Bonds

Corporate and Treasury bonds generally produce more interest revenue than municipal bonds.Why do investors choose to buy municipal bonds?

Treasury bills are issued in minimum units of $10,000 with maturities that range from 10 to 30 years.

Tom McCallister buys a bond that the company can retire before maturity if they wish.What type of bond has Tom purchased?

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

The current yield for a bond is determined by dividing the annual income amount by the current market value.

In reality,there is no guarantee that convertible bondholders will convert to common stock even if the price of the common stock does increase.

Treasury notes are issued in $100 units with a maturity of more than 1 year,but not more than 10 years.

Because bonds are considered debt financing that must be repaid at maturity,the corporation's financial stability has little effect on the bond's value between the issue date and the maturity date.

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

Which one of the following statements is correct?

Interest payments for registered bonds are usually mailed directly to the bondholder of record.

The legal conditions for a corporate bond are described in the:

The interest rate for a $1,000 bond is 6 percent.If comparable bonds are paying 8 percent,what is the approximate market value for of the 6 percent bond?

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?

Generally,U.S.government securities issued by the Treasury Department:

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

Which one of the following is issued by state and local governments?

Dave Johnson's objective was to purchase a government bond that provided some protection against inflation and higher prices.To fulfill this objective,John purchased a:

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

Which type of bond would provide the most price stability?

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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