Question 1

The yield to maturity takes into account the relationship among a bond's maturity value and

Accepted Answer

A)  the time to maturity.
B)  the current price.
C)  the dollar amount of interest.
D)  the corporate rate
E)  the time to maturity, the current price, the dollar amount of interest, and the corporate rate.F) A) and C)
G) C) and D)

Question 2

The method used to pay bondholders their interest is the same regardless the type of bond.

Accepted Answer

A) True 
 B)False

Question 3

A 'muni' is a municipal serial bond that partially matures every year for its term.

Accepted Answer

A) True 
 B)False

Question 4

A fund to which annual or semiannual deposits are made for the purpose of redeeming a bond issue is called a(n)  ____________ fund.

Accepted Answer

A)  serial
B)  money
C)  debenture
D)  indenture
E)  sinkingF) A) and D)
G) B) and D)

Question 5

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

Accepted Answer

A)  Highest
B)  Superior
C)  Good
D)  Adequate
E)  SpeculativeF) A) and C)
G) D) and E)

Question 6

The dollar amount repaid at maturity on a bond is referred to as its __________________.

Accepted Answer

A)  Face value
B)  market value
C)  coupon payment
D)  capital gain
E)  future valueF) B) and E)
G) None of the above

Question 7

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 8

The type of bond that is not registered in the investor's name is a ___________ bond.

Accepted Answer

A)  revenue
B)  general obligation
C)  tax-exempt
D)  zero-coupon
E)  bearerF) A) and C)
G) A) and E)

Question 9

If a bond is purchased at a price above 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 D)
G) B) and E)

Question 10

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

Accepted Answer

A)  increase in value.
B)  decrease in value.
C)  remain unchanged.
D)  become worthless.
E)  be returned to the corporation.F) A) and E)
G) All of the above

Question 11

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 12

Which of the following statements is true?

Accepted Answer

A)  Convertible corporate bonds are more secure than government bonds.
B)  Convertible bonds often pay 1 to 2 percent more interest than nonconvertible bonds.
C)  Because of the conversion feature, it is not necessary to evaluate convertible, corporate bonds.
D)  In reality, there is no guarantee that bondholders will convert to common stock even if the market value of the common stock does increase in value.
E)  Even if convertible bondholders convert their investment to common stock, the bondholders still receive interest payments.F) D) and E)
G) A) and E)

Question 13

What is the current yield for a $1,000 corporate bond that pays 7 percent and has a current market value of $975?

Accepted Answer

A)  7 percent
B)  7.18 percent
C)  8.33 percent
D)  9 percent
E)  10 percentF) B) and E)
G) A) and E)

Question 14

When a bond is selling for less than its face value, it is said to be selling at a:

Accepted Answer

A)  discount.
B)  premium.
C)  commission.
D)  conservative value.
E)  prospectus value.F) All of the above
G) A) and C)

Question 15

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

Exam 12: Investing in Bonds

The yield to maturity takes into account the relationship among a bond's maturity value and

Correct Answer
verified

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

Correct Answer
verified

A 'muni' is a municipal serial bond that partially matures every year for its term.

Correct Answer
verified

What is the current yield for a $1,000 corporate bond that pays 7 percent and has a current market value of $975?

Correct Answer
verified

Although there is a great deal of information on the Internet about stock investments, it is impossible to evaluate bonds using the Internet.

Correct Answer
verified

The method used to pay bondholders their interest is the same regardless the type of bond.

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

The dollar amount repaid at maturity on a bond is referred to as its __________________.

Correct Answer
verified

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

Correct Answer
verified

The type of bond that is not registered in the investor's name is a ___________ bond.

Correct Answer
verified

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

Correct Answer
verified

A fund to which annual or semiannual deposits are made for the purpose of redeeming a bond issue is called a(n) ____________ fund.

Correct Answer
verified

When a bond is selling for less than its face value, it is said to be selling at a:

Correct Answer
verified

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

Correct Answer
verified

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 Answer
verified

Exam 12: Investing in Bonds

The yield to maturity takes into account the relationship among a bond's maturity value and

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

A 'muni' is a municipal serial bond that partially matures every year for its term.

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 $975?

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

The method used to pay bondholders their interest is the same regardless the type of bond.

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

The dollar amount repaid at maturity on a bond is referred to as its __________________.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The type of bond that is not registered in the investor's name is a ___________ bond.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A fund to which annual or semiannual deposits are made for the purpose of redeeming a bond issue is called a(n) ____________ fund.

Correct AnswerverifiedShow Answer

When a bond is selling for less than its face value, it is said to be selling at a:

Correct AnswerverifiedShow Answer

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

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

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