Question 1

With a ________,only the registered owner can collect the principal at maturity,but interest payments can be paid to anyone who presents one of the detachable coupons.

Accepted Answer

A)  registered coupon bond
B)  bearer bond
C)  corporate bond
D)  money market account
E)  savings bondF) C) and E)
G) B) and E)

Question 2

A corporate bond is a corporation's written pledge that it will repay a specified amount of money with interest.

Accepted Answer

A) True 
 B)False

Question 3

A registered bond is a bond whose ownership is listed in the owner's name by the issuing company.

Accepted Answer

A) True 
 B)False

Question 4

If the terms of the sinking fund provision are not met,the ________ may take legal action against the company on behalf of the bondholders.

Accepted Answer

A)  stockholder
B)  arbitrator
C)  mediator
D)  trustee
E)  guardianF) D) and E)
G) B) and C)

Question 5

Sandra Peterson has been thinking about investing in corporate bonds.She is concerned about safety and wants the most secure bond investment possible.She would most likely invest in ________ bonds.

Accepted Answer

A)  debenture
B)  mortgage
C)  speculative
D)  convertible
E)  subordinated debentureF) A) and D)
G) B) and C)

Question 6

Dave Harris has just purchased a bond with a face value of $1,000 that pays 4 percent.The purchase price of the bond was $950,and the bond will mature in 5 years.What is the yield to maturity for this bond (round to the nearest tenth of a percent) ?

Accepted Answer

A)  4.0 percent
B)  6.0 percent
C)  5.1 percent
D)  8.2 percent
E)  9.0 percentF) A) and E)
G) D) and E)

Question 7

Corporate bonds are a form of equity financing that does not have to be repaid.

Accepted Answer

A) True 
 B)False

Question 8

Which one of the following statements is true?

Accepted Answer

A)  All convertible corporate bonds are quality investments.
B)  Convertible bonds often pay 3 to 4 percent more interest than nonconvertible bonds.
C)  Because of the conversion feature,investors are attracted to the conservative gain that common stock conversion may provide.
D)  There is no guarantee that bondholders will convert to common stock even if the market value of the common stock does increase in value.
E)  Even if convertible bondholders convert their investment to common stock,the bondholders still receive interest payments.F) B) and E)
G) A) and C)

Question 9

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 10

Which of the following is a fund to which annual or semiannual deposits are made for the purpose of redeeming a bond issue?

Accepted Answer

A)  Call feature
B)  Sinking fund
C)  Deposit fund
D)  Premium fund
E)  Savings accountF) A) and D)
G) A) and C)

Question 11

You own a $1,000 bond that pays 9 percent interest.What is the amount of interest you will receive each six months?

Accepted Answer

A)  $4.50
B)  $9.00
C)  $90.00
D)  $45.00
E)  $22.50F) None of the above
G) B) and E)

Question 12

In addition to those issued by the Treasury Department,debt securities are issued by federal agencies,including Fannie Mae,Ginnie Mae,and Freddie Mac.

Accepted Answer

A) True 
 B)False

Question 13

Insured municipal bonds offer slightly lower interest rates than uninsured bonds because of the reduced risk of default.

Accepted Answer

A) True 
 B)False

Question 14

If comparable bonds are paying 6 percent and the approximate market price of a $1,000 bond is $850,then what is the annual interest on the bond?

Accepted Answer

A)  $25
B)  $51
C)  $60
D)  $85
E)  $120F) A) and D)
G) A) and E)

Question 15

If a bond is quoted in the newspaper at 103,the current price of a $1,000 face value bond is:

Accepted Answer

A)  $30.00.
B)  $97.00.
C)  $970.00.
D)  $1,103.00.
E)  $1,030.00.F) B) and D)
G) None of the above

Question 16

When investors purchase bonds that mature at regular intervals in order to balance risk and return,they are creating a:

Accepted Answer

A)  bond ladder.
B)  staggered investment program.
C)  incremental investment program.
D)  step-up allocation program.
E)  guaranteed investment program.F) C) and D)
G) A) and B)

Question 17

Since 2000,bond yields for high-quality corporate bonds have increased significantly.

Accepted Answer

A) True 
 B)False

Question 18

Maturity dates for corporate bonds generally range from 1 to 10 years.

Accepted Answer

A) True 
 B)False

Question 19

For government bonds,the bid price is the maximum price that a buyer is willing to pay for a government security.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 15: Investing in Bonds

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

Correct AnswerverifiedShow Answer

Insured municipal bonds offer slightly lower interest rates than uninsured bonds because of the reduced risk of default.

Correct AnswerverifiedShow Answer

Which of the following is a fund to which annual or semiannual deposits are made for the purpose of redeeming a bond issue?

Correct AnswerverifiedShow Answer

In addition to those issued by the Treasury Department,debt securities are issued by federal agencies,including Fannie Mae,Ginnie Mae,and Freddie Mac.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Corporate bonds are a form of equity financing that does not have to be repaid.

Correct AnswerverifiedShow Answer

A corporate bond is a corporation's written pledge that it will repay a specified amount of money with interest.

Correct AnswerverifiedShow Answer

If the terms of the sinking fund provision are not met,the ________ may take legal action against the company on behalf of the bondholders.

Correct AnswerverifiedShow Answer

A registered bond is a bond whose ownership is listed in the owner's name by the issuing company.

Correct AnswerverifiedShow Answer

Dave Harris has just purchased a bond with a face value of $1,000 that pays 4 percent.The purchase price of the bond was $950,and the bond will mature in 5 years.What is the yield to maturity for this bond (round to the nearest tenth of a percent) ?

Correct AnswerverifiedShow Answer

If comparable bonds are paying 6 percent and the approximate market price of a $1,000 bond is $850,then what is the annual interest on the bond?

Correct AnswerverifiedShow Answer

If a bond is quoted in the newspaper at 103,the current price of a $1,000 face value bond is:

Correct AnswerverifiedShow Answer

With a ________,only the registered owner can collect the principal at maturity,but interest payments can be paid to anyone who presents one of the detachable coupons.

Correct AnswerverifiedShow Answer

Since 2000,bond yields for high-quality corporate bonds have increased significantly.

Correct AnswerverifiedShow Answer

You own a $1,000 bond that pays 9 percent interest.What is the amount of interest you will receive each six months?

Correct AnswerverifiedShow Answer

For government bonds,the bid price is the maximum price that a buyer is willing to pay for a government security.

Correct AnswerverifiedShow Answer

Sandra Peterson has been thinking about investing in corporate bonds.She is concerned about safety and wants the most secure bond investment possible.She would most likely invest in ________ bonds.

Correct AnswerverifiedShow Answer

When investors purchase bonds that mature at regular intervals in order to balance risk and return,they are creating a:

Correct AnswerverifiedShow Answer

Which one of the following statements is true?

Correct AnswerverifiedShow Answer

Maturity dates for corporate bonds generally range from 1 to 10 years.

Correct AnswerverifiedShow Answer

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