Question 1

Which type of bond is not registered in the investor's name?

Accepted Answer

A)  revenue
B)  general obligation
C)  bearer
D)  zero-coupon
E)  tax-exempt

Question 2

John Peterson purchased a bond that is priced far below its face value,that makes no interest payments,and that will be redeemed at its face value at maturity.In all likelihood,he purchased a(n) ____________ bond.

Accepted Answer

A)  debenture
B)  convertible
C)  indenture
D)  registered
E)  zero-coupon

Question 3

A convertible bond is a bond that can be exchanged,at the owner's option,for a specified number of shares of the corporation's common stock.

Accepted Answer

A) True 
 B)False

Question 4

A type of bond that is unsecured and gives bondholders a claim secondary to that of other designated bondholders with respect to both income and assets is called a:

Accepted Answer

A)  debenture bond.
B)  mortgage bond.
C)  subordinated debenture.
D)  preemptive bonD.
E)  treasury bond.

Question 5

Which of the following statements is true with respect to U.S.Treasury issues?

Accepted Answer

A)  Treasury bills are issued in minimum units of $10,000 with maturities that range from 10 to 30 years.
B)  Treasury notes are issued in $100 units with a maturity of more than 1 year,but not more than 10 years.
C)  Treasury bonds are issued in $5,000 units with 10-year maturities.
D)  The Treasury no longer issues Treasury bills.
E)  Treasury bills generally pay a higher interest rate than Treasury bonds.

Question 6

A bond that can be exchanged,at the owner's option,for a specified number of shares of the corporation's stock is called a(n) ____________ bond.

Accepted Answer

A)  debenture
B)  mortgage
C)  indenture
D)  convertible
E)  subordinated

Question 7

If overall interest rates in the economy rise,a corporate bond with a fixed interest rate will generally:

Accepted Answer

A)  increase in value.
B)  decrease in value.
C)  remain unchanged.
D)  become worthless.
E)  be returned to the corporation.

Question 8

Scott Turner has a bond with 10 years to maturity,a face value of $1,000,an 8% interest rate,and a market price of $800.What is the yield-to-maturity on this bond?

Accepted Answer

A)  4.00 percent
B)  6.67 percent
C)  8.00 percent
D)  10.00 percent
E)  11.11 percent

Question 9

A bond that is repaid from the income generated by the project it is designed to finance is called a(n) :

Accepted Answer

A)  Treasury bill.
B)  savings bond.
C)  revenue bond.
D)  general obligation bonD.
E)  agency bond.

Question 10

Which of the following terms applies to a bond issue for which the issuer puts money aside at regular intervals for the purpose of redeeming the bonds?

Accepted Answer

A)  serial
B)  default
C)  sinking fund
D)  low-coupon
E)  convertible

Question 11

Dave Harris purchased a single bond last year for $987.He knows he will receive $1,000 on March 1,2026.This date is referred to as the ____ date.

Accepted Answer

A)  maturity
B)  purchase
C)  record
D)  ex-dividend
E)  declaration

Question 12

Which one of the following is a 'junk' bond?

Accepted Answer

A)  Treasury bond
B)  bond rated B by Standard and Poor's
C)  bond rated AAA by Standard and Poor's
D)  insured municipal bond
E)  Treasury bill

Question 13

If a bond is quoted in the newspaper at 92,the current price of a $1,000 face value bond is:

Accepted Answer

A)  $9.20.
B)  $92.00.
C)  $920.00.
D)  $1,000.00.
E)  $1,092.00.

Question 14

What is the current yield for a $1,000 corporate bond that pays 7 percent and has a current market value of $800?

Accepted Answer

A)  7.25 percent
B)  8.10 percent
C)  8.75 percent
D)  10.00 percent
E)  11.40 percent

Question 15

What is the approximate market value of a $1,000 corporate bond that pays 8 percent interest when comparable bonds are paying 9 percent interest?

Accepted Answer

A)  $80
B)  $90
C)  $889
D)  $1,000
E)  $1,125

Question 16

Bond's are generally considered a relatively safe investment.How is it possible to lose money on bonds?

Accepted Answer

The answer of Bond's are generally considered a relatively safe...

Question 17

You are a taxpayer in the 28 percent tax bracket and you own a tax-exempt bond that pays 5 percent.What is your taxable equivalent yield?

Accepted Answer

A)  5.00 percent
B)  6.00 percent
C)  6.94 percent
D)  7.20 percent
E)  14.40 percent

Question 18

Dave Harris has just purchased a bond with a face value of $1,000 that pays 6 percent.The purchase price of the bond was $900,and the bond will mature in 5 years.What is the yield to maturity for this bond?

Accepted Answer

A)  5.5 percent
B)  6.0 percent
C)  8.4 percent
D)  9.0 percent
E)  6.7 percent

Question 19

If overall interest rates in the economy fall,a corporate bond with a fixed interest rate will generally:

Accepted Answer

A)  increase in value.
B)  decrease in value.
C)  remain unchanged.
D)  become worthless.
E)  be returned to the corporation.

Question 20

Frank Riley just purchased a bond that is unsecured and is secondary to other unsecured bonds should the issuer declare bankruptcy.What type of bond has Frank purchased?

Accepted Answer

A)  debenture
B)  subordinated debenture
C)  convertible
D)  callable
E)  municipal

Exam 15: Investing in Bonds

Which of the following terms applies to a bond issue for which the issuer puts money aside at regular intervals for the purpose of redeeming the bonds?

Correct AnswerverifiedShow Answer

Which type of bond is not registered in the investor's name?

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Frank Riley just purchased a bond that is unsecured and is secondary to other unsecured bonds should the issuer declare bankruptcy.What type of bond has Frank purchased?

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Bond's are generally considered a relatively safe investment.How is it possible to lose money on bonds?

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A bond that can be exchanged,at the owner's option,for a specified number of shares of the corporation's stock is called a(n) ____________ bond.

Correct AnswerverifiedShow Answer

If overall interest rates in the economy fall,a corporate bond with a fixed interest rate will generally:

Correct AnswerverifiedShow Answer

John Peterson purchased a bond that is priced far below its face value,that makes no interest payments,and that will be redeemed at its face value at maturity.In all likelihood,he purchased a(n) ____________ bond.

Correct AnswerverifiedShow Answer

Which one of the following is a 'junk' bond?

Correct AnswerverifiedShow Answer

Dave Harris purchased a single bond last year for $987.He knows he will receive $1,000 on March 1,2026.This date is referred to as the ____ date.

Correct AnswerverifiedShow Answer

Scott Turner has a bond with 10 years to maturity,a face value of $1,000,an 8% interest rate,and a market price of $800.What is the yield-to-maturity on this bond?

Correct AnswerverifiedShow Answer

What is the approximate market value of a $1,000 corporate bond that pays 8 percent interest when comparable bonds are paying 9 percent interest?

Correct AnswerverifiedShow Answer

What is the current yield for a $1,000 corporate bond that pays 7 percent and has a current market value of $800?

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Dave Harris has just purchased a bond with a face value of $1,000 that pays 6 percent.The purchase price of the bond was $900,and the bond will mature in 5 years.What is the yield to maturity for this bond?

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A convertible bond is a bond that can be exchanged,at the owner's option,for a specified number of shares of the corporation's common stock.

Correct AnswerverifiedShow Answer

You are a taxpayer in the 28 percent tax bracket and you own a tax-exempt bond that pays 5 percent.What is your taxable equivalent yield?

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A bond that is repaid from the income generated by the project it is designed to finance is called a(n) :

Correct AnswerverifiedShow Answer

If a bond is quoted in the newspaper at 92,the current price of a $1,000 face value bond is:

Correct AnswerverifiedShow Answer

A type of bond that is unsecured and gives bondholders a claim secondary to that of other designated bondholders with respect to both income and assets is called a:

Correct AnswerverifiedShow Answer

Which of the following statements is true with respect to U.S.Treasury issues?

Correct AnswerverifiedShow Answer

If overall interest rates in the economy rise,a corporate bond with a fixed interest rate will generally:

Correct AnswerverifiedShow Answer

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