Question 1

Elizabeth Cherry has a bond that has 10 years to maturity,a face value of $1,000,an 8% interest rate,and a market price of $1,200.What is the dollar amount of annual interest on this bond?

Accepted Answer

A)  $20
B)  $80
C)  $100
D)  $120
E)  $200F) D) and E)
G) None of the above

Question 2

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)  None of these.F) A) and E)
G) A) and B)

Question 3

_____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 E)
G) A) and D)

Question 4

In the U.S.,the _____ for a bond represents the price of the bond plus accrued interest earned since the last interest payment date.

Accepted Answer

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

Question 5

Interest rates on high-yield (junk) bonds are _____ percentage points higher than safer bond issues.

Accepted Answer

A)  one to two
B)  two to three
C)  three to four
D)  four to five
E)  five to sixF) B) and D)
G) None of the above

Question 6

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

Accepted Answer

An investor can actually lose money by s...

Question 7

Tom McCallister buys a bond that the company can retire before maturity if they wish.What type of bond has Tom purchased?

Accepted Answer

A)  Debenture bond
B)  Subordinated debenture bond
C)  Convertible bond
D)  Callable bond
E)  High-yield bondF) A) and E)
G) B) and D)

Question 8

With the use of technology and computers,the book entry form of bond ownership is no longer used.

Accepted Answer

A) True 
 B)False

Question 9

Nancy Groom owns a $1,000 corporate bond that pays 8.5 percent.What is the amount of each semiannual interest payment?

Accepted Answer

A)  $4.25
B)  $42.50
C)  $85.00
D)  $850.00
E)  $425.00F) A) and E)
G) A) and D)

Question 10

Which one of the following statements is true?

Accepted Answer

A)  Corporate bonds do not have a maturity date.
B)  The maturity dates for corporate bonds are generally less than a year.
C)  Corporate bonds do not have to be repaid.
D)  Corporate bonds are a form of equity financing.
E)  Long-term corporate bonds have maturities over 10 years.F) B) and C)
G) B) and D)

Question 11

Interest checks for registered bonds are generally mailed directly to the bondholder of record.

Accepted Answer

A) True 
 B)False

Question 12

The Treasury Department currently sells T-bills with _____maturities.

Accepted Answer

A)  4-week
B)  13-week
C)  26-week
D)  52-week
E)  All of theseF) A) and E)
G) A) and B)

Question 13

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) B) and E)
G) B) and C)

Question 14

A legal debt convertible to shares of common stock at the investor's option is called a ____________.

Accepted Answer

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

Question 15

Treasury bills:

Accepted Answer

A)  are rated by Moody's.
B)  pay interest every six months.
C)  are long-term securities issued by the federal government.
D)  are discounted securities.
E)  pay a higher interest rate than corporate bonds.F) A) and B)
G) B) and C)

Question 16

Scott Turner has a bond with 10 years to maturity,a face value of $1,000,annual interest of $80,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 percentF) A) and E)
G) B) and C)

Question 17

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 18

You own a $1,000 bond that pays 9.25 percent interest.What is the amount of interest you will receive each six months?

Accepted Answer

A)  $4.62
B)  $9.25
C)  $92.50
D)  $46.25
E)  $23.13F) A) and C)
G) A) and B)

Question 19

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

Question 20

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) D) and E)
G) A) and D)

Exam 15: Investing in Bonds

In the U.S.,the _____ for a bond represents the price of the bond plus accrued interest earned since the last interest payment date.

Correct AnswerverifiedShow Answer

With the use of technology and computers,the book entry form of bond ownership is no longer used.

Correct AnswerverifiedShow Answer

Interest checks for registered bonds are generally mailed directly to the bondholder of record.

Correct AnswerverifiedShow Answer

Elizabeth Cherry has a bond that has 10 years to maturity,a face value of $1,000,an 8% interest rate,and a market price of $1,200.What is the dollar amount of annual interest on this bond?

Correct AnswerverifiedShow Answer

Treasury bills:

Correct AnswerverifiedShow Answer

_____are bonds of a single issue that mature on different dates.

Correct AnswerverifiedShow Answer

What is bond laddering?

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Nancy Groom owns a $1,000 corporate bond that pays 8.5 percent.What is the amount of each semiannual interest payment?

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

Tom McCallister buys a bond that the company can retire before maturity if they wish.What type of bond has Tom purchased?

Correct AnswerverifiedShow Answer

The commissions for purchasing bonds:

Correct AnswerverifiedShow Answer

A legal debt convertible to shares of common stock at the investor's option is called a ____________.

Correct AnswerverifiedShow Answer

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

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

Correct AnswerverifiedShow Answer

You own a $1,000 bond that pays 9.25 percent interest.What is the amount of interest you will receive each six months?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedAn investor can actually lose money by s...View AnswerShow Answer

Scott Turner has a bond with 10 years to maturity,a face value of $1,000,annual interest of $80,and a market price of $800.What is the yield-to-maturity on this bond?

Correct AnswerverifiedShow Answer

The Treasury Department currently sells T-bills with _____maturities.

Correct AnswerverifiedShow Answer

Interest rates on high-yield (junk) bonds are _____ percentage points higher than safer bond issues.

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Which one of the following statements is true?

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An investor can actually lose money by s...
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