Question 1

Assume that you purchase a $1,000 corporate bond that pays 10-3/4 percent interest. What is the amount of interest that you receive each year?

Accepted Answer

A)  $1,000 
B)  $107.50 
C)  $100 
D)  $10 
E)  $10.75 
A)  $1,000 
B)  $107.50 
C)  $100 
D)  $10 
E)  $10.75

Question 2

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

Question 4

Melanie Nash owns one $1,000 corporate bond issued by Chevron. The bond pays 6.5 percent. If interest is paid semiannually, what is the amount of the cheque that Ms. Nash will receive at the end of each six-month period?

Accepted Answer

A)  $6.25 
B)  $32.50 
C)  $65 
D)  $325 
E)  $1,000 
A)  $6.25 
B)  $32.50 
C)  $65 
D)  $325 
E)  $1,000

Question 5

A corporate bond rated B by the DBRS would be suitable for:

Accepted Answer

A)  every investor. 
B)  very cautious investors. 
C)  speculators. 
D)  no one because the bond issue is in default. 
E)  knowledge investors. 
A)  every investor. 
B)  very cautious investors. 
C)  speculators. 
D)  no one because the bond issue is in default. 
E)  knowledge investors.

Question 6

Assume that you purchased a $1,000 Rogers bond that pays 6 percent interest. What is the amount of interest you would receive each six months?

Accepted Answer

A)  $6.00 
B)  $3.00 
C)  $60.00 
D)  $30.00 
E)  $1,000 
A)  $6.00 
B)  $3.00 
C)  $60.00 
D)  $30.00 
E)  $1,000

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

What is the approximate market value for 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 9

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 10

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

Accepted Answer

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

Question 11

A sinking fund is a fund to which deposits are made each year for the purpose of redeeming a bond issue.

Accepted Answer

A) True 
 B)False

Question 12

A mortgage bond is a corporate bond that is secured by various assets of the issuing firm.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following methods could be used by an investor to obtain a corporation's annual report?

Accepted Answer

A)  the Internet 
B)  a reader's service 
C)  an 800 telephone number 
D)  a written request 
E)  the Internet, a reader's service, an 800 telephone number, and a written request could be used to obtain a corporation's annual report. 
A)  the Internet 
B)  a reader's service 
C)  an 800 telephone number 
D)  a written request 
E)  the Internet, a reader's service, an 800 telephone number, and a written request could be used to obtain a corporation's annual report.

Question 14

Phillip owns two (2) $1,000 corporate bonds issued by Exxon. The bond pays 5 percent. If interest is paid semiannually, what is the amount of the cheque that Phillip will receive at the end of each six-month period?

Accepted Answer

A)  $5 
B)  $10 
C)  $50 
D)  $100 
E)  $1,000 
A)  $5 
B)  $10 
C)  $50 
D)  $100 
E)  $1,000

Question 15

The type of bond that is not registered in the investor's name is a ___________ bond.

Accepted Answer

A)  revenue 
B)  general obligation 
C)  tax-exempt 
D)  zero-coupon 
E)  bearer 
A)  revenue 
B)  general obligation 
C)  tax-exempt 
D)  zero-coupon 
E)  bearer

Question 16

The dollar amount repaid at maturity on a bond is referred to as its __________________.

Accepted Answer

A)  Face value 
B)  market value 
C)  coupon payment 
D)  capital gain 
E)  future value 
A)  Face value 
B)  market value 
C)  coupon payment 
D)  capital gain 
E)  future value

Question 17

A government security issued in minimum units of $1,000 with maturities that are less than one year is called a:

Accepted Answer

A)  subordinated bond. 
B)  treasury bond. 
C)  treasury note. 
D)  treasury bill. 
E)  savings bond. 
A)  subordinated bond. 
B)  treasury bond. 
C)  treasury note. 
D)  treasury bill. 
E)  savings bond.

Question 18

A type of bond that is unsecured and gives bondholders a claim secondary to that of other designated bondholders, with respect to both income and assets is called a(n):

Accepted Answer

A)  debenture bond. 
B)  mortgage bond. 
C)  preemptive bond. 
D)  subordinated debenture. 
E)  treasury bond. 
A)  debenture bond. 
B)  mortgage bond. 
C)  preemptive bond. 
D)  subordinated debenture. 
E)  treasury bond.

Question 19

Although there is a great deal of information on the Internet about stock investments, it is impossible to evaluate bonds using the Internet.

Accepted Answer

A) True 
 B)False

Question 20

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 percent 
B)  7.5 percent 
C)  8.00 percent 
D)  8.75 percent 
E)  10 percent 
A)  7 percent 
B)  7.5 percent 
C)  8.00 percent 
D)  8.75 percent 
E)  10 percent

Assume that you purchase a $1,000 corporate bond that pays 10-3/4 percent interest. What is the amount of interest that you receive each year?

A call feature:

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

Melanie Nash owns one $1,000 corporate bond issued by Chevron. The bond pays 6.5 percent. If interest is paid semiannually, what is the amount of the cheque that Ms. Nash will receive at the end of each six-month period?

A corporate bond rated B by the DBRS would be suitable for:

Assume that you purchased a $1,000 Rogers bond that pays 6 percent interest. What is the amount of interest you would receive each six months?

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

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

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

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

A sinking fund is a fund to which deposits are made each year for the purpose of redeeming a bond issue.

A mortgage bond is a corporate bond that is secured by various assets of the issuing firm.

Which of the following methods could be used by an investor to obtain a corporation's annual report?

Phillip owns two (2) $1,000 corporate bonds issued by Exxon. The bond pays 5 percent. If interest is paid semiannually, what is the amount of the cheque that Phillip will receive at the end of each six-month period?

The type of bond that is not registered in the investor's name is a ___________ bond.

The dollar amount repaid at maturity on a bond is referred to as its __________________.

A government security issued in minimum units of $1,000 with maturities that are less than one year is called a:

A type of bond that is unsecured and gives bondholders a claim secondary to that of other designated bondholders, with respect to both income and assets is called a(n):

Although there is a great deal of information on the Internet about stock investments, it is impossible to evaluate bonds using the Internet.

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

Personal Financial Planning: An Introduction

Money Management Strategy: Financial Statements and Budgeting

Planning Your Tax Strategy

The Banking Services of Financial Institutions

Introduction to Consumer Credit

Choosing a Source Credit: the Costs of Credit Alternatives

The Finances of Housing

Home and Automobile Insurance

Life, Health, and Disability Insurance

Fundamentals of Investing

Investing in Stocks

Investing in Mutual Funds

Retirement Planning

Estate Planning

Filters

Exam 12: Investing in Bonds

Assume that you purchase a $1,000 corporate bond that pays 10-3/4 percent interest. What is the amount of interest that you receive each year?

A call feature:

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

Melanie Nash owns one $1,000 corporate bond issued by Chevron. The bond pays 6.5 percent. If interest is paid semiannually, what is the amount of the cheque that Ms. Nash will receive at the end of each six-month period?

A corporate bond rated B by the DBRS would be suitable for:

Assume that you purchased a $1,000 Rogers bond that pays 6 percent interest. What is the amount of interest you would receive each six months?

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

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

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

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

A sinking fund is a fund to which deposits are made each year for the purpose of redeeming a bond issue.

A mortgage bond is a corporate bond that is secured by various assets of the issuing firm.

Which of the following methods could be used by an investor to obtain a corporation's annual report?

Phillip owns two (2) $1,000 corporate bonds issued by Exxon. The bond pays 5 percent. If interest is paid semiannually, what is the amount of the cheque that Phillip will receive at the end of each six-month period?

The type of bond that is not registered in the investor's name is a ___________ bond.

The dollar amount repaid at maturity on a bond is referred to as its __________________.

A government security issued in minimum units of $1,000 with maturities that are less than one year is called a:

A type of bond that is unsecured and gives bondholders a claim secondary to that of other designated bondholders, with respect to both income and assets is called a(n):

Although there is a great deal of information on the Internet about stock investments, it is impossible to evaluate bonds using the Internet.

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

Personal Financial Planning: An Introduction

Money Management Strategy: Financial Statements and Budgeting

Planning Your Tax Strategy

The Banking Services of Financial Institutions

Introduction to Consumer Credit

Choosing a Source Credit: the Costs of Credit Alternatives

The Finances of Housing

Home and Automobile Insurance

Life, Health, and Disability Insurance

Fundamentals of Investing

Investing in Stocks

Investing in Mutual Funds

Retirement Planning

Estate Planning

Filters