Question 1

Bonds of a single issue that mature on different dates are called ____________ bonds.

Accepted Answer

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

Question 2

A registered bond is registered for principal and for interest.

Accepted Answer

A) True 
 B)False

Question 3

Treasury bills are issued a minimum unit of $1,000 with additional increments of $1,000 above the minimum with terms to maturity of 91, 186, or 364 days

Accepted Answer

A) True 
 B)False

Question 4

A mortgage bond is a corporate bond secured by various assets of the firm.

Accepted Answer

A) True 
 B)False

Question 5

A $l,000 corporate bond is convertible to 20 shares of the corporation's common stock.What is the minimum price that the stock must obtain before bondholders would consider converting a bond to the company's common stock?

Accepted Answer

A)  $10
B)  $20
C)  $30
D)  $40
E)  $50F) B) and D)
G) B) and C)

Question 6

Based on the Dominion Bond Rating Service a bond with a rating of BBB has what type of credit?

Accepted Answer

A)  Highest
B)  Superior
C)  Good
D)  Adequate
E)  SpeculativeF) A) and E)
G) All of the above

Question 7

The highest bond rating issued by the Dominion Bond Rating Service (DBRS)  is

Accepted Answer

A)  AAA.
B)  Aaa.
C)  A+.
D)  BB.
E)  Excellent.F) A) and C)
G) B) and E)

Question 8

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 9

If overall interest rates in the economy raise, then a corporate bond with a fixed interest rate will decrease in value.

Accepted Answer

A) True 
 B)False

Question 10

Canada Savings Bonds are issued in $1,000 units with a maturity of more than 1 year, but not more than 10 years.

Accepted Answer

A) True 
 B)False

Question 11

What is the annualized yield of a 200 days T-Bill with a purchase price of $940.00?

Accepted Answer

A)  20.0%
B)  17.15%
C)  9.40%
D)  6.38%
E)  11.90%F) D) and E)
G) B) and D)

Question 12

A registered coupon bond is registered for interest, but not for the principal amount.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements is false?

Accepted Answer

A)  Generally, it is impossible to evaluate bond investments by accessing a corporation's home page.
B)  Price information about corporate bonds is available on the Internet.
C)  Although it is possible to use the Internet to evaluate a corporate bond issue, it is impossible to buy or sell the bond issue.
D)  There are fewer Web sites that provide information on bonds when compared to Web sites that provide information for stocks.
E)  You can either write or telephone the corporation and request an annual report.F) A) and B)
G) B) and E)

Question 15

Which of the following statements is false?

Accepted Answer

A)  The federal government sells bonds and securities to finance both the national debt and the government's ongoing activities.
B)  Federal government securities carry a reduced risk of default when compared to corporate securities.
C)  Federal government treasury securities offer lower interest rates than corporate bonds.
D)  Most individual investors that purchase treasury bills, notes, and bonds bid competitively.
E)  Treasury securities may be purchased through banks or brokers.F) A) and D)
G) C) and D)

Question 16

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) B) and D)
G) All of the above

Question 17

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

Accepted Answer

A)  decrease in value.
B)  increase in value.
C)  remain unchanged.
D)  become worthless.
E)  be returned to the corporation.F) None of the above
G) D) and E)

Question 18

Investors who purchase subordinated debentures usually enjoy higher interest rates than other bondholders because of the increased risk associated with this type of bond.

Accepted Answer

A) True 
 B)False

Question 19

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) All of the above
G) C) and D)

Question 20

A collateral trust bond is secured by a pledge of securities and is oft en issued by companies that do not own many fixed assets but do own other securities.

Accepted Answer

A) True 
 B)False

Exam 12: Investing in Bonds

Which of the following statements is false?

Correct AnswerverifiedShow Answer

A $l,000 corporate bond is convertible to 20 shares of the corporation's common stock.What is the minimum price that the stock must obtain before bondholders would consider converting a bond to the company's common stock?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The highest bond rating issued by the Dominion Bond Rating Service (DBRS) is

Correct AnswerverifiedShow Answer

Treasury bills are issued a minimum unit of $1,000 with additional increments of $1,000 above the minimum with terms to maturity of 91, 186, or 364 days

Correct AnswerverifiedShow Answer

If overall interest rates in the economy raise, then a corporate bond with a fixed interest rate will decrease in value.

Correct AnswerverifiedShow Answer

Which of the following statements is false?

Correct AnswerverifiedShow Answer

Investors who purchase subordinated debentures usually enjoy higher interest rates than other bondholders because of the increased risk associated with this type of bond.

Correct AnswerverifiedShow Answer

A registered coupon bond is registered for interest, but not for the principal amount.

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

Canada Savings Bonds are issued in $1,000 units with a maturity of more than 1 year, but not more than 10 years.

Correct AnswerverifiedShow Answer

A collateral trust bond is secured by a pledge of securities and is oft en issued by companies that do not own many fixed assets but do own other securities.

Correct AnswerverifiedShow Answer

A registered bond is registered for principal and for interest.

Correct AnswerverifiedShow Answer

A mortgage bond is a corporate bond secured by various assets of the firm.

Correct AnswerverifiedShow Answer

Based on the Dominion Bond Rating Service a bond with a rating of BBB has what type of credit?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

What is the annualized yield of a 200 days T-Bill with a purchase price of $940.00?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Bonds of a single issue that mature on different dates are called ____________ bonds.

Correct AnswerverifiedShow Answer

A call feature:

Correct AnswerverifiedShow Answer

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