Exam 16: Investing in Bonds

Callable bonds are issued when interest rates are expected to

Figuring the present value of future coupon payments,along with the present value of the principal payment,is a good way to determine the value of a bond.

Another name for the par value of a bond is its ________.

If a bond can be exchanged for common stock at the discretion of the bondholder,the bond is a(n)________.

Investors are willing to purchase bonds with a call feature only if the bonds offer a(n)

The interest received from U.S.Treasury bonds is exempt from federal,state,and local income taxes.

Federal agency bonds are all of the following except

As interest rates go up,bond prices

If a company anticipates a substantive decline in interest rates in the future,which of the following are they likely to include in a bond?

Which of the following tax effects could not occur with the purchase and sale of a corporate bond?

A(n)________ corporate bond will pay a ________ return.

The ________ is the amount returned to the investor at the maturity date when the bond is due.

Bonds that have a call feature are less desirable to investors and therefore pay a slightly higher rate than bonds without this feature.

As an investor,is it prudent to purchase individual bonds or a bond mutual fund? Discuss the risks of each investment.

All bonds are subject to the following risks except

Bonds usually pay interest

Because convertibility is a desirable feature for investors,convertible bonds tend to offer a higher return than non-convertible bonds.

________ bonds are issued by state and local government agencies.

Since municipal bond interest is exempt from federal income tax,it is especially beneficial to high-income investors.

An advantage to owning bonds is that investors can sell them to other investors in the primary market before the bonds reach maturity.