Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Maturity dates for corporate bonds generally range from 5 to 7years.

Accepted Answer

A) True 
 B)False

Question 3

A type of bond that is unsecured and gives bondholders a claim secondary to that of other designated bondholders,with respect to both income and assets is called a(n) :

Accepted Answer

A)   debenture bond.
B)   mortgage bond.
C)   preemptive bond.
D)   subordinated debenture.
E)   treasury bond.F) B) and D)
G) A) and B)

Question 4

A corporate bond that is secured by various assets of the issuing firm is called a(n) ____________ bond.

Accepted Answer

A)   debenture
B)   indenture
C)   mortgage
D)   preemptive
E)   treasuryF) A) and C)
G) B) and D)

Question 5

A corporate bond is a corporation's written pledge that it will repay a specified amount of money with interest.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False  True

Question 7

Which of the following statements is correct?

Accepted Answer

A)   Stock is a form of debt capital.
B)   Bonds are a form of debt capital.
C)   Stock must be repaid at maturity.
D)   Bonds do not have to be repaid at maturity.
E)   Interest payments to bondholders are at the discretion of the corporation.F) A) and B)
G) A) and E) B

Question 8

Investors purchase corporate bonds for

Accepted Answer

A)   interest income.
B)   possible increase in value.
C)   repayment at maturity.
D)   interest income,possible increase in value,and repayment at maturity.
E)   secured promise to pay interest made by the issuing company.F) A) and C)
G) A) and E)

Question 9

Melanie Nash owns one $1,000 corporate bond issued by Chevron.The bond pays 6.5 percent.If interest is paid semiannually,what is the amount of the cheque that Ms.Nash will receive at the end of each six-month period?

Accepted Answer

A)   $6.25
B)   $32.50
C)   $65
D)   $325
E)   $1,000F) B) and E)
G) None of the above

Question 10

Which of the following statements is true?

Accepted Answer

A)   All local newspapers contain information on bond prices.
B)   In bond quotations,prices are given as a percentage of the bond's face value.
C)   The face value for most corporate bonds is $5,000.
D)   To find the market price of a corporate bond,you must contact the corporation that originally issued the bond.
E)   To find the market price of a corporate bond,you must call a stockbroker.F) A) and B)
G) All of the above B

Question 11

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

Question 12

In reality,there is no guarantee that convertible bondholders will convert to common stock even if the price of the common stock does increase.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A)   the Internet
B)   a reader's service
C)   an 800 telephone number
D)   a written request
E)   the Internet,a reader's service,an 800 telephone number,and a written request could be used to obtain a corporation's annual report.F) B) and D)
G) A) and B)

Question 14

Assume that you purchase a $1,000 corporate bond that pays 10¾ percent interest.What is the amount of interest that you receive each year?

Accepted Answer

A)   $1,000
B)   $100.75
C)   $100
D)   $10
E)   $10.75F) None of the above
G) C) and D)

Question 15

The interest rate for a $1,000 bond is 6 percent.If comparable bonds are paying 8 percent,what is the approximate market value for the 6 percent bond?

Accepted Answer

A)   $1,000
B)   $800
C)   $750
D)   $600
E)   $500F) None of the above
G) A) and E)

Question 16

Mortgage bonds are agreements that pledge land,buildings,or equipment as securities for a loan.

Accepted Answer

A) True 
 B)False

Question 17

The trustee is an independent firm that acts as the bondholders' representative.

Accepted Answer

A) True 
 B)False

Question 18

Sun Corporation wants to retire a $50 million bond issue before the maturity date.What is the typical call premium per bond that Sun Corporation must pay for the bonds to be called back?

Accepted Answer

A)   $100
B)   $10-$50
C)   $20-$75
D)   $50-$100
E)   $1-$10F) B) and D)
G) B) and E)

Question 19

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) A) and C)

Question 20

A corporate bond rated B by the DBRS 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)   knowledge investors.F) B) and C)
G) A) and E)

Exam 12: Investing in Stocks

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

Correct AnswerverifiedShow Answer

Maturity dates for corporate bonds generally range from 5 to 7years.

Correct AnswerverifiedShow Answer

A type of bond that is unsecured and gives bondholders a claim secondary to that of other designated bondholders,with respect to both income and assets is called a(n) :

Correct AnswerverifiedShow Answer

A corporate bond that is secured by various assets of the issuing firm is called a(n) ____________ bond.

Correct AnswerverifiedShow Answer

A corporate bond is a corporation's written pledge that it will repay a specified amount of money with interest.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedTrue

Which of the following statements is correct?

Correct AnswerverifiedB

Investors purchase corporate bonds for

Correct AnswerverifiedShow Answer

Melanie Nash owns one $1,000 corporate bond issued by Chevron.The bond pays 6.5 percent.If interest is paid semiannually,what is the amount of the cheque that Ms.Nash will receive at the end of each six-month period?

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedB

Which of the following statements is false?

Correct AnswerverifiedShow Answer

In reality,there is no guarantee that convertible bondholders will convert to common stock even if the price of the common stock does increase.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Assume that you purchase a $1,000 corporate bond that pays 10¾ percent interest.What is the amount of interest that you receive each year?

Correct AnswerverifiedShow Answer

The interest rate for a $1,000 bond is 6 percent.If comparable bonds are paying 8 percent,what is the approximate market value for the 6 percent bond?

Correct AnswerverifiedShow Answer

Mortgage bonds are agreements that pledge land,buildings,or equipment as securities for a loan.

Correct AnswerverifiedShow Answer

The trustee is an independent firm that acts as the bondholders' representative.

Correct AnswerverifiedShow Answer

Sun Corporation wants to retire a $50 million bond issue before the maturity date.What is the typical call premium per bond that Sun Corporation must pay for the bonds to be called back?

Correct AnswerverifiedShow Answer

A call feature:

Correct AnswerverifiedShow Answer

A corporate bond rated B by the DBRS would be suitable for:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
True

Correct Answer
verified
B

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
B

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified