Exam 11: Bond and Fixed-Income Fundamentals

The largest segment of the corporate bond market consists of

Preferred stock dividends are tax-deductible to the corporation, and also provide tax advantages to the corporate investor.

Foreign bonds normally provide:

A bond quote of 91 7/8 on a $1,000 par value bond means the bond is trading at $918.75.

Municipal bonds normally pay:

The higher the bond rating of a corporation, the higher the interest rate that is likely to be paid.

A corporation must generally pay taxes on only 30% of the dividends (preferred or common) that it receives from another corporation.

There is evidence that the bond market may be less efficient than the stock market.

In many respects, the bond market appears to demonstrate a high degree of rationality of risk and return.

Money market funds represent a vehicle to buy short-term fixed-income securities through a mutual fund arrangement.

The most important feature of municipal bonds is:

As the yield spread between high and low rating categories increases, this indicates a gain of confidence in the economy.

Treasury strips provide return through: