Question 1

Bonds are identified by all of the following except

Accepted Answer

Bonds are identified by their issuer, maturity, and coupon. Rating is not an identifying feature but rather an assessment of credit quality.

Question 2

How much interest does an XYZ 7s09 bond pay each year?

Accepted Answer

The "7s09" indicates that the bond pays 7% interest annually.

Question 3

The details of a bond issue are contained in the

Accepted Answer

The indenture contains the details of a bond issue, including the terms of the issue, the rights of the bondholders, and the obligations of the issuer.

Question 4

U. S. treasury bonds are ______ issues.

Accepted Answer

U.S. Treasury bonds are backed by the "full faith and credit" of the U.S. government, meaning they are considered one of the safest investments.

Question 5

Which of the following is the correct order of increasing maturity?

Accepted Answer

Treasury bills have the shortest maturity, followed by notes, and then bonds, which have the longest maturity.

Question 6

Which of the following are most similar?

Accepted Answer

The answer of Which of the following are most similar?
...

Question 7

A debenture is like a _____ loan.

Accepted Answer

A debenture is an unsecured loan, often referred to as a signature loan, because it is backed only by the borrower's creditworthiness and not by any collateral.

Question 8

Which of the following is most likely to be financed by a revenue bond?

Accepted Answer

Revenue bonds are typically used to finance projects that generate their own revenue, such as toll bridges.

Question 9

Treasury bonds have an initial life of more than ___ years.

Accepted Answer

Treasury bonds have an initial life of more than ten years, typically ranging from 10 to 30 years.

Question 10

Debt that uses land and buildings as collateral is a _____ loan.

Accepted Answer

A mortgage loan is a type of debt that is secured by real estate, such as land and buildings, which serves as collateral for the loan.

Question 11

A cash reserve for the ultimate repayment of bond principal is a

Accepted Answer

A sinking fund is specifically set aside to repay bond principal at maturity, ensuring that the issuer has the necessary funds to pay off the debt.

Question 12

A fleet of trucks might logically be financed with

Accepted Answer

Equipment trust certificates are typically used to finance movable equipment like trucks, as they are secured by the equipment itself.

Question 13

A loan with a large final payment is a _____ loan.

Accepted Answer

A balloon loan is characterized by a large final payment, known as a balloon payment, which is significantly larger than the preceding regular payments.

Question 14

A bond on which the interest is payable only if it is earned is a(n) ____ bond.

Accepted Answer

An income bond is a bond on which the interest is payable only if it is earned.

Question 15

An income bond is most likely to be associated with financing which of the following?

Accepted Answer

Income bonds are typically issued for projects that generate revenue, such as a toll bridge, where the bond's interest payments are contingent on the revenue generated by the project.

Question 16

Typical bond cash flows include all of the following except

Accepted Answer

The answer of Typical bond cash flows include all of...

Question 17

An example of a variable rate security is a

Accepted Answer

The answer of An example of a variable rate security...

Question 18

A ____ company issued a famous commodity-backed convertible bond.

Accepted Answer

A silver mining company issued a famous commodity-backed convertible bond, as these bonds are often backed by the commodities the company produces, such as silver.

Question 19

New debt may no longer be issued in _____ form.

Accepted Answer

Bearer form debt is no longer issued because it poses significant risks, such as loss or theft, and lacks the traceability of registered or book-entry forms.

Question 20

If you hold a bond certificate with your name on it, it is a _____ bond.

Accepted Answer

A registered bond is one that is recorded in the name of the holder, and the bond certificate will have the holder's name on it.

Quiz 12: Bond Pricing and Selection