Exam 16: Investing in Bonds

Municipal bonds are those issued by the U.S.Treasury Department for the benefit of cities and states.

Which of the following is not a feature of a bond?

Bonds are issued with a callable feature when the issuers expect interest rates to rise.

________ bonds are the least risky of all bonds and,therefore,pay a lower rate of interest.

Issuing bonds has the following disadvantage.

Which of the following bond issuers would be subject to both federal and state income taxes?

If a bond's price were lower than the principal amount,its yield to maturity would be ________ than the coupon rate.

The two future cash flows used to determine a bond value are the periodic coupon payments and the ________ at maturity.

If you expect interest rates to rise over time,you should consider investing in bonds with longer maturities.

When a bond has a par or face value of $1,000 and a 6 percent coupon rate,the semi-annual payment would be $60.

A bond's yield to maturity is the annualized percentage return of both interest and capital gains or losses if the bond were held until it matured.

Generally,bonds have maturities between 10 and 30 years and pay interest annually.

A passive strategy of bond investing consists of buying bonds for the long term and not selling them until maturity.

Which of the following is not always a true statement?

Investors purchase bonds because

The possibility that a bond will be called by the corporation prior to its maturity is an example of a(n)________ risk.

Your son will be ready for college in 10 years and your daughter in 15.Which of the following bond strategies would be best suited to your goal of financing your children's education?

Which of the following is not a characteristic of corporate bonds?

Last yield is calculated by

The risk premium of bonds is the amount by which their annualized yield exceeds the Treasury bond yield.