Question 1

The bond that you own does not pay any interest.Instead,it is sold at a "discount" from its maturity value.This is a ________ bond.

Accepted Answer

A) no interest 
B) face discount 
C) growth 
D) zero coupon 
E) none of the above 
A) no interest 
B) face discount 
C) growth 
D) zero coupon 
E) none of the above

Question 2

Bonds that do not pay interest are known as no-load bonds.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following bonds would be appropriate for a retired person seeking a stream of income during retirement?

Accepted Answer

A) U.S.Treasury 
B) Investment grade corporate bond 
C) Municipal bond 
D) All of the above are correct. 
A) U.S.Treasury 
B) Investment grade corporate bond 
C) Municipal bond 
D) All of the above are correct.

Question 4

The par value of the bond is the rate at which payments will be made to the bondholder annually,in the form of interest.

Accepted Answer

A) True 
 B)False

Question 5

Compare and contrast preferred stock with bonds and common stock.

Accepted Answer

Preferred stock is often called a hybrid

Question 6

Most corporate bonds are tax-free bonds in the state the corporation is based in.

Accepted Answer

A) True 
 B)False

Question 7

What risks are you assuming with preferred stock that you would not have with common stock and bonds? Be specific.

Accepted Answer

When interest rates rise,the value of th

Question 8

Randall has $25,000 and is considering investing in bonds.With this amount of start up money he should look into which of the following bonds?

Accepted Answer

A) Agency bonds 
B) Corporate bonds 
C) Pass-through certificates 
D) All of the above would be good choices. 
A) Agency bonds 
B) Corporate bonds 
C) Pass-through certificates 
D) All of the above would be good choices.

Question 9

Corporations receive a tax break on the dividend income from preferred stock.

Accepted Answer

A) True 
 B)False

Question 10

You hold in your hands a legal document that provides the specific terms of the loan agreement,including a description of the bond,as well as the rights of the bondholder.You have a(n)

Accepted Answer

A) agency contract. 
B) bond signatory. 
C) signatory contract. 
D) indenture. 
E) debenture. 
A) agency contract. 
B) bond signatory. 
C) signatory contract. 
D) indenture. 
E) debenture.

Question 11

Since 1980 the price of gold

Accepted Answer

A) has been fairly constant. 
B) has steadily risen. 
C) has steadily fallen. 
D) has bounced up and down. 
A) has been fairly constant. 
B) has steadily risen. 
C) has steadily fallen. 
D) has bounced up and down.

Question 12

Kathy Faust was paid all of her past dividends before any common stock dividends were declared.Obviously,she profited from preferred stock's ________ feature.

Accepted Answer

A) adjustable rate 
B) cumulative 
C) convertible 
D) multiple issue 
E) callability 
A) adjustable rate 
B) cumulative 
C) convertible 
D) multiple issue 
E) callability

Question 13

Which of the following is true regarding fluctuations in the prices of bonds?

Accepted Answer

A) When interest rates go up,bond prices go up. 
B) When interest rates go down,you want to purchase very short-term bonds. 
C) As interest rates rise,investors demand a higher return on bonds. 
D) all of the above 
E) only A and B 
A) When interest rates go up,bond prices go up. 
B) When interest rates go down,you want to purchase very short-term bonds. 
C) As interest rates rise,investors demand a higher return on bonds. 
D) all of the above 
E) only A and B

Question 14

It is a fact that there is a(n)________ relationship between interest rates and bond values in the secondary market.When interest rates ________,bond prices ________,and when interest rates ________,bond prices ________.

Accepted Answer

A) direct;rise;rise;drop;drop 
B) direct;rise;drop;drop;rise 
C) inverse;rise;drop;drop;rise 
D) inverse;rise;rise;drop;drop 
E) direct;drop;rise;rise;drop 
A) direct;rise;rise;drop;drop 
B) direct;rise;drop;drop;rise 
C) inverse;rise;drop;drop;rise 
D) inverse;rise;rise;drop;drop 
E) direct;drop;rise;rise;drop

Question 15

Because there is no default or call risk associated with government bonds,they generally pay ________ rate of interest than other bonds.

Accepted Answer

A) a higher 
B) a lower 
C) the same 
D) none of the above 
A) a higher 
B) a lower 
C) the same 
D) none of the above

Question 16

A firm can only have one issue of preferred stock available at any one point in time.

Accepted Answer

A) True 
 B)False

Question 17

What is the par value of a corporate bond that was issued with an 9% annual coupon,pays $45 in semiannual interest,and is due in 15 years?

Accepted Answer

A) $1,000.00 
B) $1,070.23 
C) $1,080.00 
D) $1,167.33 
A) $1,000.00 
B) $1,070.23 
C) $1,080.00 
D) $1,167.33

Question 18

The advantages of Treasury bonds include

Accepted Answer

A) there is no default. 
B) they can't be called in. 
C) most interest is free of state and local taxes. 
D) all of the above. 
E) only A and C. 
A) there is no default. 
B) they can't be called in. 
C) most interest is free of state and local taxes. 
D) all of the above. 
E) only A and C.

Question 19

What is the purpose of the sinking fund?

Accepted Answer

A) To force the issuing company to save money to retire the bonds at maturity 
B) To raise outside capital to sink back into the company 
C) To cause the coupon rate to increase 
D) None of the above is correct. 
A) To force the issuing company to save money to retire the bonds at maturity 
B) To raise outside capital to sink back into the company 
C) To cause the coupon rate to increase 
D) None of the above is correct.

Question 20

Which of the following is not an example of speculative investing as outlined in the text?

Accepted Answer

A) Gold 
B) Silver 
C) Stocks 
D) Precious stones 
E) Collectibles 
A) Gold 
B) Silver 
C) Stocks 
D) Precious stones 
E) Collectibles

The bond that you own does not pay any interest.Instead,it is sold at a "discount" from its maturity value.This is a ________ bond.

Bonds that do not pay interest are known as no-load bonds.

Which of the following bonds would be appropriate for a retired person seeking a stream of income during retirement?

The par value of the bond is the rate at which payments will be made to the bondholder annually,in the form of interest.

Compare and contrast preferred stock with bonds and common stock.

Most corporate bonds are tax-free bonds in the state the corporation is based in.

What risks are you assuming with preferred stock that you would not have with common stock and bonds? Be specific.

Randall has $25,000 and is considering investing in bonds.With this amount of start up money he should look into which of the following bonds?

Corporations receive a tax break on the dividend income from preferred stock.

You hold in your hands a legal document that provides the specific terms of the loan agreement,including a description of the bond,as well as the rights of the bondholder.You have a(n)

Since 1980 the price of gold

Kathy Faust was paid all of her past dividends before any common stock dividends were declared.Obviously,she profited from preferred stock's ________ feature.

Which of the following is true regarding fluctuations in the prices of bonds?

It is a fact that there is a(n) relationship between interest rates and bond values in the secondary market.When interest rates ,bond prices ,and when interest rates ,bond prices .

Because there is no default or call risk associated with government bonds,they generally pay ________ rate of interest than other bonds.

A firm can only have one issue of preferred stock available at any one point in time.

What is the par value of a corporate bond that was issued with an 9% annual coupon,pays $45 in semiannual interest,and is due in 15 years?

The advantages of Treasury bonds include

What is the purpose of the sinking fund?

Which of the following is not an example of speculative investing as outlined in the text?

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: the Role of Open Credit

Student and Consumer Loans: the Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Investing in Stocks

Mutual Funds: an Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Eventsfitting the Pieces Together

Filters

Exam 13: Investing in Bonds and Other Alternatives

The bond that you own does not pay any interest.Instead,it is sold at a "discount" from its maturity value.This is a ________ bond.

Bonds that do not pay interest are known as no-load bonds.

Which of the following bonds would be appropriate for a retired person seeking a stream of income during retirement?

The par value of the bond is the rate at which payments will be made to the bondholder annually,in the form of interest.

Compare and contrast preferred stock with bonds and common stock.

Most corporate bonds are tax-free bonds in the state the corporation is based in.

What risks are you assuming with preferred stock that you would not have with common stock and bonds? Be specific.

Randall has $25,000 and is considering investing in bonds.With this amount of start up money he should look into which of the following bonds?

Corporations receive a tax break on the dividend income from preferred stock.

You hold in your hands a legal document that provides the specific terms of the loan agreement,including a description of the bond,as well as the rights of the bondholder.You have a(n)

Since 1980 the price of gold

Kathy Faust was paid all of her past dividends before any common stock dividends were declared.Obviously,she profited from preferred stock's ________ feature.

Which of the following is true regarding fluctuations in the prices of bonds?

It is a fact that there is a(n)________ relationship between interest rates and bond values in the secondary market.When interest rates ________,bond prices ________,and when interest rates ________,bond prices ________.

Because there is no default or call risk associated with government bonds,they generally pay ________ rate of interest than other bonds.

A firm can only have one issue of preferred stock available at any one point in time.

What is the par value of a corporate bond that was issued with an 9% annual coupon,pays $45 in semiannual interest,and is due in 15 years?

The advantages of Treasury bonds include

What is the purpose of the sinking fund?

Which of the following is not an example of speculative investing as outlined in the text?

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: the Role of Open Credit

Student and Consumer Loans: the Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Investing in Stocks

Mutual Funds: an Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Eventsfitting the Pieces Together

Filters

It is a fact that there is a(n) relationship between interest rates and bond values in the secondary market.When interest rates ,bond prices ,and when interest rates ,bond prices .