Question 1

Nancy Groom owns a $1,000 corporate bond that pays 6 percent.What is the dollar amount of each semiannual interest payment?

Accepted Answer

A)  $3.00
B)  $30.00
C)  $60.00
D)  $300.00
E)  $600.00F) C) and E)
G) A) and D) B

Question 2

________ are bonds of a single issue that mature on different dates.

Accepted Answer

A)  Convertible bonds
B)  High-yield bonds
C)  Mortgage bonds
D)  Serial bonds
E)  Debenture bondsF) A) and B)
G) B) and D)

Question 3

A legal debt convertible to shares of common stock at the investor's option is called a(n) ________.

Accepted Answer

A)  debenture bond
B)  mortgage bond
C)  indenture note
D)  convertible corporate note
E)  convertible bondF) C) and E)
G) A) and C)

Question 4

The commissions for purchasing bonds:

Accepted Answer

A)  are stated in plain language as with stocks.
B)  are a stated dollar amount for each bond you buy.
C)  may be a combination of a stated dollar amount plus an additional commission.
D)  include a markdown when buying.
E)  include a markup when selling.F) A) and E)
G) C) and D)

Question 5

For government bonds,the difference between the bid price and the ask price is called the:

Accepted Answer

A)  dirty price.
B)  asked price.
C)  spread.
D)  clean price.
E)  quoted price.F) B) and D)
G) A) and C) C

Question 6

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)  high-yield
D)  subordinate
E)  serialF) B) and E)
G) A) and B)

Question 7

The only way an investor can make money on a bond investment is to hold the bond until maturity.

Accepted Answer

A) True 
 B)False

Question 8

If the current yield for a $1,000 corporate bond is 8 percent and it has a current market value of $900,then what is the annual income generated by the investment?

Accepted Answer

A)  $10
B)  $72
C)  $80
D)  $90
E)  $100F) C) and E)
G) A) and B) B

Question 9

Which of the following sources can be used by an investor to obtain a corporation's annual report?

Accepted Answer

A)  Professional advisory services
B)  Corporation's website
C)  Phone call to corporation
D)  Written request mailed to the corporation
E)  All of these sources can be used by an investor to obtain an annual report.F) B) and C)
G) A) and D)

Question 10

In the U.S.,bond price quotations are based on the price of a bond with no accrued or earned interest,which is called the:

Accepted Answer

A)  dirty price.
B)  asked price.
C)  spread.
D)  clean price.
E)  coupon price.F) B) and E)
G) All of the above

Question 11

What is bond laddering?

Accepted Answer

A)  Buying only long-term bonds
B)  Buying only short-term bonds
C)  Buying bonds with maturity dates spread out over a number of years
D)  Combining stock and bond investments
E)  Exchanging bonds for shares of stockF) A) and E)
G) D) and E)

Question 12

Usually,interest on corporate bonds is paid to the bondholder every:

Accepted Answer

A)  month.
B)  three months.
C)  six months.
D)  nine months.
E)  year.F) A) and B)
G) A) and E)

Question 13

When investing in bonds,there are a lot of factors to consider.To help you decide if a bond is a good investment that will help you reach your financial goals,list 4 steps you can take.

Accepted Answer

1.Determine what type of bond you want.
...

Question 14

Mary Smith would like to invest in 10 T-bills that will have a maturity value of $1,000.The bills have a stated interest rate of 2 percent.What would be the purchase price of these T-bills?

Accepted Answer

A)  $960
B)  $970
C)  $980
D)  $990
E)  $1,000F) B) and E)
G) B) and D)

Question 15

June Tavia is trying to calculate the taxable equivalent yield for a municipal bond.If the bond she owns pays 5 percent interest and she is in the 22 percent tax bracket,what is the taxable-equivalent yield (round to nearest percent) ?

Accepted Answer

A)  4 percent
B)  5 percent
C)  6 percent
D)  7 percent
E)  8 percentF) C) and E)
G) A) and B)

Question 16

Which one of the following is issued by state and local governments?

Accepted Answer

A)  Treasury bond
B)  Treasury bill
C)  Municipal bond
D)  Corporate bond
E)  Common stockF) B) and C)
G) None of the above

Question 17

If a bond is quoted in the newspaper at 96,the current price of a $1,000 face value bond is:

Accepted Answer

A)  $9.60.
B)  $96.00.
C)  $960.00.
D)  $1,000.00.
E)  $1,096.00.F) A) and B)
G) A) and C)

Question 18

What are the three ways to make money with a bond investment?

Accepted Answer

1.Interest income
2...

Question 19

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

Accepted Answer

A)  Treasury bills are issued in minimum units of $10,000 with maturities that range from 10 to 30 years.
B)  Typical maturities for treasury notes are 2,3,5,7,and 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.F) B) and C)
G) A) and E)

Question 20

Which of the following are owned by a company and can be used to secure a mortgage bond?

Accepted Answer

A)  Dividends
B)  Bond indentures
C)  Liabilities
D)  Interest payments
E)  AssetsF) A) and B)
G) C) and D)

Exam 15: Investing in Bonds

Nancy Groom owns a $1,000 corporate bond that pays 6 percent.What is the dollar amount of each semiannual interest payment?

Correct AnswerverifiedB

________ are bonds of a single issue that mature on different dates.

Correct AnswerverifiedShow Answer

A legal debt convertible to shares of common stock at the investor's option is called a(n) ________.

Correct AnswerverifiedShow Answer

The commissions for purchasing bonds:

Correct AnswerverifiedShow Answer

For government bonds,the difference between the bid price and the ask price is called the:

Correct AnswerverifiedC

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

Correct AnswerverifiedShow Answer

The only way an investor can make money on a bond investment is to hold the bond until maturity.

Correct AnswerverifiedShow Answer

If the current yield for a $1,000 corporate bond is 8 percent and it has a current market value of $900,then what is the annual income generated by the investment?

Correct AnswerverifiedB

Which of the following sources can be used by an investor to obtain a corporation's annual report?

Correct AnswerverifiedShow Answer

In the U.S.,bond price quotations are based on the price of a bond with no accrued or earned interest,which is called the:

Correct AnswerverifiedShow Answer

What is bond laddering?

Correct AnswerverifiedShow Answer

Usually,interest on corporate bonds is paid to the bondholder every:

Correct AnswerverifiedShow Answer

When investing in bonds,there are a lot of factors to consider.To help you decide if a bond is a good investment that will help you reach your financial goals,list 4 steps you can take.

Correct Answerverified1.Determine what type of bond you want....View AnswerShow Answer

Mary Smith would like to invest in 10 T-bills that will have a maturity value of $1,000.The bills have a stated interest rate of 2 percent.What would be the purchase price of these T-bills?

Correct AnswerverifiedShow Answer

June Tavia is trying to calculate the taxable equivalent yield for a municipal bond.If the bond she owns pays 5 percent interest and she is in the 22 percent tax bracket,what is the taxable-equivalent yield (round to nearest percent) ?

Correct AnswerverifiedShow Answer

Which one of the following is issued by state and local governments?

Correct AnswerverifiedShow Answer

If a bond is quoted in the newspaper at 96,the current price of a $1,000 face value bond is:

Correct AnswerverifiedShow Answer

What are the three ways to make money with a bond investment?

Correct Answerverified1.Interest income 2...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following are owned by a company and can be used to secure a mortgage bond?

Correct AnswerverifiedShow Answer

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B

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C

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B

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1.Determine what type of bond you want.
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1.Interest income
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