Question 1

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 2

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)  declarationF) C) and D)
G) A) and E)

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

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

Accepted Answer

A)  Treasury bill.
B)  savings bond.
C)  revenue bond.
D)  general obligation bond.
E)  agency bond.F) All of the above
G) D) and E)

Question 5

A sinking fund is a fund to which deposits are made each year for the purpose of redeeming a bond issue.

Accepted Answer

A) True 
 B)False

Question 6

A corporate bond rated B by Moody's would be suitable for:

Accepted Answer

A)  every investor.
B)  very cautious investors.
C)  speculators.
D)  no one because the bond issue is in default.
E)  investors who are highly dependent upon the interest income.F) None of the above
G) B) and C)

Question 7

The quality rating given by Standard & Poor's to highly speculative bonds is:

Accepted Answer

A)  high-grade.
B)  problematic or default.
C)  investment-grade.
D)  medium-grade.
E)  unrated.F) B) and D)
G) B) and C)

Question 8

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 9

Since 1990,bond yields for high-quality corporate bonds have increased significantly.

Accepted Answer

A) True 
 B)False

Question 10

Doug Emery purchased a bond that can be exchanged for a set number of shares of the issuer's common stock.What type of bond has Doug purchased?

Accepted Answer

A)  Debenture
B)  Subordinated debenture
C)  Convertible
D)  Callable
E)  High-yieldF) None of the above
G) A) and C)

Question 11

The bond debenture is a legal document that details all of the conditions relating to a bond issue.

Accepted Answer

A) True 
 B)False

Question 12

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 13

If a bond is purchased at a price below the face value,the yield to maturity is:

Accepted Answer

A)  greater than the stated interest rate.
B)  the same as the stated interest rate.
C)  less than the stated interest rate.
D)  zero.
E)  of no significance.F) A) and E)
G) B) and D)

Question 14

For 2015,bond yields for high-quality corporate bonds have been approximately how much?

Accepted Answer

A)  2%
B)  4%
C)  6%
D)  8%
E)  10%F) A) and B)
G) A) and D)

Question 15

According to Moody's,bonds with extremely poor prospects for recovery of principal or interest are rated:

Accepted Answer

A)  A-.
B)  B-.
C)  C.
D)  E.
E)  F.F) A) and C)
G) C) and D)

Question 16

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) A) and C)
G) C) and D)

Question 17

Maturity dates for corporate bonds generally range from 5 to 10 years.

Accepted Answer

A) True 
 B)False

Question 18

Treasury bonds are issued in $5,000 units with 10-year maturities.

Accepted Answer

A) True 
 B)False

Question 19

Which one of the following represents a bond that generally lacks characteristics of a safe investment and is subject to high credit risk?

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 billF) C) and E)
G) A) and B)

Question 20

Dave Johnson's objective was to purchase a government bond that provided some protection against inflation as measured by the consumer price index.To fulfill this objective,John purchased a:

Accepted Answer

A)  T-bill.
B)  T-note.
C)  T-bond.
D)  TIPS.
E)  general obligation bond.F) D) and E)
G) B) and D)

Exam 15: Investing in Bonds

Treasury bonds are issued in $5,000 units with 10-year maturities.

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

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

Correct AnswerverifiedShow Answer

The bond debenture is a legal document that details all of the conditions relating to a bond issue.

Correct AnswerverifiedShow Answer

Dave Johnson's objective was to purchase a government bond that provided some protection against inflation as measured by the consumer price index.To fulfill this objective,John purchased a:

Correct AnswerverifiedShow Answer

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

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

Since 1990,bond yields for high-quality corporate bonds have increased significantly.

Correct AnswerverifiedShow Answer

Which one of the following represents a bond that generally lacks characteristics of a safe investment and is subject to high credit risk?

Correct AnswerverifiedShow Answer

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

The quality rating given by Standard & Poor's to highly speculative bonds is:

Correct AnswerverifiedShow Answer

A corporate bond rated B by Moody's would be suitable for:

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

According to Moody's,bonds with extremely poor prospects for recovery of principal or interest are rated:

Correct AnswerverifiedShow Answer

A sinking fund is a fund to which deposits are made each year for the purpose of redeeming a bond issue.

Correct AnswerverifiedShow Answer

If a bond is purchased at a price below the face value,the yield to maturity is:

Correct AnswerverifiedShow Answer

Doug Emery purchased a bond that can be exchanged for a set number of shares of the issuer's common stock.What type of bond has Doug purchased?

Correct AnswerverifiedShow Answer

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

For 2015,bond yields for high-quality corporate bonds have been approximately how much?

Correct AnswerverifiedShow Answer

Maturity dates for corporate bonds generally range from 5 to 10 years.

Correct AnswerverifiedShow Answer

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