Question 1

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

Accepted Answer

A)  Treasury 
B)  Municipal 
C)  Federal agency 
D)  Corporate 
A)  Treasury 
B)  Municipal 
C)  Federal agency 
D)  Corporate

Question 2

To completely avoid the risk of default,investors can invest in Treasury bonds or A-rated corporate bonds.

Accepted Answer

A) True 
 B)False

Question 3

Bonds with longer maturities are more sensitive to interest rate movements than bonds that have shorter maturities.

Accepted Answer

A) True 
 B)False

Question 4

The relationship between a bond's price and the yield to maturity

Accepted Answer

A)  changes at a rate equal to the change in yield. 
B)  is linear. 
C)  is inverse. 
D)  is relative. 
A)  changes at a rate equal to the change in yield. 
B)  is linear. 
C)  is inverse. 
D)  is relative.

Question 5

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

Accepted Answer

A)  slightly lower return than similar bonds without a call feature. 
B)  slightly higher number of shares of the issuer's stock. 
C)  slightly higher return than similar bonds without a call feature. 
D)  extraordinary return similar to an IPO. 
A)  slightly lower return than similar bonds without a call feature. 
B)  slightly higher number of shares of the issuer's stock. 
C)  slightly higher return than similar bonds without a call feature. 
D)  extraordinary return similar to an IPO.

Question 6

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

Accepted Answer

A)  lower-rated; higher 
B)  higher-rated; higher 
C)  lower-rated; lower 
D)  unrated; lower 
A)  lower-rated; higher 
B)  higher-rated; higher 
C)  lower-rated; lower 
D)  unrated; lower

Question 7

Which of the following is a characteristic of corporate bonds?

Accepted Answer

A)  Rated on a scale from AAAA to FFFF 
B)  Used to finance debt over a short period such as six months 
C)  Issued as long-term debt securities 
D)  Exempt from state tax in the state where the issuing company has its headquarters 
A)  Rated on a scale from AAAA to FFFF 
B)  Used to finance debt over a short period such as six months 
C)  Issued as long-term debt securities 
D)  Exempt from state tax in the state where the issuing company has its headquarters

Question 8

Corporate bond quotations in the daily financial newspapers include all of the following,except

Accepted Answer

A)  coupon rate and volume. 
B)  maturity and closing price. 
C)  current yield and net change from the previous day. 
D)  original face value of the bond. 
A)  coupon rate and volume. 
B)  maturity and closing price. 
C)  current yield and net change from the previous day. 
D)  original face value of the bond.

Question 9

Bonds with ________ terms to maturity are ________ sensitive to interest rate movements than bonds that have short terms remaining until maturity.

Accepted Answer

A)  middle; less 
B)  longer; less 
C)  longer; more 
D)  longer; equally 
A)  middle; less 
B)  longer; less 
C)  longer; more 
D)  longer; equally

Question 10

All bonds are subject to the following risks except

Accepted Answer

A)  default risk. 
B)  call risk. 
C)  interest rate risk. 
D)  impact of economic conditions. 
A)  default risk. 
B)  call risk. 
C)  interest rate risk. 
D)  impact of economic conditions.

Question 11

If you want to receive periodic income from your investments,you should consider investing in bonds rather than stocks.

Accepted Answer

A) True 
 B)False

Question 12

On the secondary bond market,

Accepted Answer

A)  only new bonds can be sold. 
B)  bonds are guaranteed to bring at least par value. 
C)  bond prices vary with interest rate movement and other factors. 
D)  bonds usually take several days to sell. 
A)  only new bonds can be sold. 
B)  bonds are guaranteed to bring at least par value. 
C)  bond prices vary with interest rate movement and other factors. 
D)  bonds usually take several days to sell.

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

To completely avoid the risk of default,investors can invest in Treasury bonds or A-rated corporate bonds.

Bonds with longer maturities are more sensitive to interest rate movements than bonds that have shorter maturities.

The relationship between a bond's price and the yield to maturity

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

A(n) corporate bond will pay a return.

Which of the following is a characteristic of corporate bonds?

Corporate bond quotations in the daily financial newspapers include all of the following,except

Bonds with terms to maturity are sensitive to interest rate movements than bonds that have short terms remaining until maturity.

All bonds are subject to the following risks except

If you want to receive periodic income from your investments,you should consider investing in bonds rather than stocks.

On the secondary bond market,

Overview of a Financial Plan

Planning With Personal Financial Statements

Applying Time Value Concepts

Using Tax Concepts for Planning

Banking and Interest Rates

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Personal Loans

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Mutual Funds

Asset Allocation

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

Filters

Exam 16: Investing in Bonds

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

To completely avoid the risk of default,investors can invest in Treasury bonds or A-rated corporate bonds.

Bonds with longer maturities are more sensitive to interest rate movements than bonds that have shorter maturities.

The relationship between a bond's price and the yield to maturity

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

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

Which of the following is a characteristic of corporate bonds?

Corporate bond quotations in the daily financial newspapers include all of the following,except

Bonds with ________ terms to maturity are ________ sensitive to interest rate movements than bonds that have short terms remaining until maturity.

All bonds are subject to the following risks except

If you want to receive periodic income from your investments,you should consider investing in bonds rather than stocks.

On the secondary bond market,

Overview of a Financial Plan

Planning With Personal Financial Statements

Applying Time Value Concepts

Using Tax Concepts for Planning

Banking and Interest Rates

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Personal Loans

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Mutual Funds

Asset Allocation

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

Filters

A(n) corporate bond will pay a return.

Bonds with terms to maturity are sensitive to interest rate movements than bonds that have short terms remaining until maturity.