Question 1

A call feature:

Accepted Answer

A)  allows bondholders to convert their bond to a specified number of shares of common stock.
B)  is not available on corporate bonds.
C)  allows the corporation to buy outstanding bonds from current bondholders before the maturity date.
D)  is only available with government securities.
E)  is guaranteed by the corporation.F) A) and E)
G) B) and C)

Question 2

If your primary goal is current yield,which one of these bonds is the wiser investment? Bond A: $1,000 corporate bond that pays 7 percent and has a current market value of $800; or Bond B: $1,000 corporate bond that pays 8.25 percent and has a current market value of $950?

Accepted Answer

Bond A current yield = ($1,000...

Question 3

If the approximate market value for of a $1,000 corporate bond is $1,125 and it pays 9 percent interest,then what are comparable bonds paying?

Accepted Answer

A)  1 percent
B)  6 percent
C)  7 percent
D)  8 percent
E)  9 percentF) A) and B)
G) A) and C)

Question 4

How do interest rates in the economy affect the price of a corporate bond?

Accepted Answer

All bonds are issued with a stated face ...

Question 5

The current yield on a corporate bond takes into account:

Accepted Answer

A)  the bond's face amount.
B)  the interest rate paid by the bond.
C)  dollar amount of interest.
D)  current market value of the bond.
E)  All of these.F) C) and D)
G) B) and E)

Question 6

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

Question 7

Which of the following can be purchased through Treasury Direct at www.treasurydirect.gov ?

Accepted Answer

A)  TIPS.
B)  Treasury bills.
C)  Treasury notes.
D)  Treasury bonds.
E)  ANSE.All of these.F) B) and E)
G) A) and E)

Question 8

XYZ Corporation wants to retire a $60 million bond issue before the maturity date.In order to call the bonds in this issue,the corporation must pay the bondholders the face value plus a premium.What is the typical premium for bonds that have been called?

Accepted Answer

A)  $100
B)  $50-$100
C)  $20-$75
D)  $10-$25
E)  $1-$10F) A) and C)
G) A) and B)

Question 9

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 percentF) B) and C)
G) A) and D)

Question 10

A government security issued in minimum units of $100 with maturities that are one year or less is called a:

Accepted Answer

A)  subordinated bond.
B)  Treasury bill.
C)  Treasury note.
D)  Treasury bond.
E)  savings bond.F) C) and D)
G) None of the above

Question 11

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.F) C) and D)
G) B) and C)

Question 12

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-exemptF) All of the above
G) A) and B)

Question 13

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) None of the above
G) C) and D)

Question 14

To ensure that it has sufficient funds available to redeem a bond issue,a corporation may issue ____________ bonds.

Accepted Answer

A)  debenture
B)  mortgage
C)  sinking fund
D)  subordinate
E)  serialF) B) and D)
G) C) and D)

Question 15

Bond interest payments are a tax-deductible business expense.

Accepted Answer

A) True 
 B)False

Question 16

Although unpopular a few years back,more and more U.S.corporations are issuing bearer bonds.

Accepted Answer

A) True 
 B)False

Question 17

In addition to the stocks 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 18

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 19

Which bond rating does Standard & Poor's assign to a bond that is in default?

Accepted Answer

A)  A
B)  B
C)  C
D)  D
E)  ZF) D) and E)
G) C) and D)

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 15: Investing in Bonds

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

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

To ensure that it has sufficient funds available to redeem a bond issue,a corporation may issue ____________ bonds.

Correct AnswerverifiedShow Answer

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

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

The current yield on a corporate bond takes into account:

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?

Correct AnswerverifiedShow Answer

Which bond rating does Standard & Poor's assign to a bond that is in default?

Correct AnswerverifiedShow Answer

A government security issued in minimum units of $100 with maturities that are one year or less is called a:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

How do interest rates in the economy affect the price of a corporate bond?

Correct AnswerverifiedAll bonds are issued with a stated face ...View AnswerShow 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

If the approximate market value for of a $1,000 corporate bond is $1,125 and it pays 9 percent interest,then what are comparable bonds paying?

Correct AnswerverifiedShow Answer

A call feature:

Correct AnswerverifiedShow Answer

If your primary goal is current yield,which one of these bonds is the wiser investment? Bond A: $1,000 corporate bond that pays 7 percent and has a current market value of $800; or Bond B: $1,000 corporate bond that pays 8.25 percent and has a current market value of $950?

Correct AnswerverifiedBond A current yield = ($1,000...View AnswerShow Answer

Bond interest payments are a tax-deductible business expense.

Correct AnswerverifiedShow Answer

XYZ Corporation wants to retire a $60 million bond issue before the maturity date.In order to call the bonds in this issue,the corporation must pay the bondholders the face value plus a premium.What is the typical premium for bonds that have been called?

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

Which of the following can be purchased through Treasury Direct at www.treasurydirect.gov ?

Correct AnswerverifiedShow Answer

Although unpopular a few years back,more and more U.S.corporations are issuing bearer bonds.

Correct AnswerverifiedShow Answer

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All bonds are issued with a stated face ...
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Bond A current yield = ($1,000...
View Answer

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