Question 1

Corporations use bonds

Accepted Answer

A)  For financing ongoing business activities. 
B)  When it is difficult to sell stock. 
C)  To improve financial leverage. 
D)  All of these are correct. 
E)  None of these is correct. 
A)  For financing ongoing business activities. 
B)  When it is difficult to sell stock. 
C)  To improve financial leverage. 
D)  All of these are correct. 
E)  None of these is correct.

Question 2

Timothy Calibe is interested in purchasing an ABC bond that pays $60 interest per year.However,similar bonds pay interest of 8%.Approximately how much should Timothy be willing to pay for his ABC bond?

Accepted Answer

Approximate market value = Dol

Question 3

Why do investors purchase corporate bonds?

Accepted Answer

A)  Dividend income 
B)  Repayment at maturity 
C)  Possible increase in value 
D)  Dividend income and repayment at maturity 
E)  Repayment at maturity and a possible increase in value 
A)  Dividend income 
B)  Repayment at maturity 
C)  Possible increase in value 
D)  Dividend income and repayment at maturity 
E)  Repayment at maturity and a possible increase in value

Question 4

After you invest,it is important to let the investments manage themselves.

Accepted Answer

A) True 
 B)False

Question 5

Business failure risk can be due to

Accepted Answer

A)  A reduction in buying power. 
B)  Changes in interest rates. 
C)  Bad management and/or unsuccessful products. 
D)  Political or social conditions. 
E)  Predictable sources of income. 
A)  A reduction in buying power. 
B)  Changes in interest rates. 
C)  Bad management and/or unsuccessful products. 
D)  Political or social conditions. 
E)  Predictable sources of income.

Question 6

Government bonds have a higher potential investment income than stocks.

Accepted Answer

A) True 
 B)False

Question 7

Municipal bonds generally are only tax-exempt at the state level.

Accepted Answer

A) True 
 B)False

Question 8

Using suggestions from financial experts like Suze Orman,calculate the amount of your assets that should be invested in growth investments as well as the amount to be invested in safer,conservative investments.Identify your assumptions and show your work.

Accepted Answer

Answers will vary based on the students'

Question 9

You are considering an investment in a municipal bond that has a yield of 5%.Your tax rate is 25%.What is your taxable equivalent yield?

Accepted Answer

A)  0.75% 
B)  4.75% 
C)  5% 
D)  5.25% 
E)  6.67% 
A)  0.75% 
B)  4.75% 
C)  5% 
D)  5.25% 
E)  6.67%

Question 10

Which of the following steps is NOT a factor to be considered before making your first investment?

Accepted Answer

A)  Work to balance your budget. 
B)  Manage your credit card debt. 
C)  Have access to other sources of cash for emergency needs. 
D)  Save at least $10,000 to invest. 
E)  Start an emergency fund. 
A)  Work to balance your budget. 
B)  Manage your credit card debt. 
C)  Have access to other sources of cash for emergency needs. 
D)  Save at least $10,000 to invest. 
E)  Start an emergency fund.

Question 11

Which of the following is not a rating agency for bonds?

Accepted Answer

A)  Moody's Investors Service 
B)  Bond Rating Corporation 
C)  Standard & Poor's Corporation 
D)  Fitch Ratings Service 
E)  Mergent, Inc 
A)  Moody's Investors Service 
B)  Bond Rating Corporation 
C)  Standard & Poor's Corporation 
D)  Fitch Ratings Service 
E)  Mergent, Inc

Question 12

After you purchase an investment,you should

Accepted Answer

A)  Assume that your investment is tax-free. 
B)  Monitor the value of your investment. 
C)  Ignore other potential investments. 
D)  Leave recordkeeping to the financial adviser. 
E)  Let the investment manage itself. 
A)  Assume that your investment is tax-free. 
B)  Monitor the value of your investment. 
C)  Ignore other potential investments. 
D)  Leave recordkeeping to the financial adviser. 
E)  Let the investment manage itself.

Question 13

You are trying to evaluate two bond issues.One bond issue is rated "A" by Moody's; the other is rated "B." How important are the bond ratings issued by Moody's Investors Service?
 Based on your answer,would you purchase the "A" bond or the "B" bond?

Accepted Answer

To determine the quality and risk associ

Question 14

Marissa Christianson is interested in buying a bond whose interest rate is 6% and current quote is 105.What is her current yield?

Accepted Answer

Current price = Quote × Face v

Question 15

Identify at least one advantage of investing in a corporate bond.

Accepted Answer

Bonds are safer than stock because bonds

Question 16

It isn't important to know how much you owe in order to survive a financial crisis.

Accepted Answer

A) True 
 B)False

Question 17

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)  serial 
A)  debenture 
B)  mortgage 
C)  sinking fund 
D)  subordinate 
E)  serial

Question 18

Assume that you purchase a $1,000 bond issued by GE that pays 5% interest each year.What is the annual interest amount?

Accepted Answer

A)  $5.00 
B)  $25.00 
C)  $40.00 
D)  $50.00 
E)  $1,000 
A)  $5.00 
B)  $25.00 
C)  $40.00 
D)  $50.00 
E)  $1,000

Question 19

A bond that is backed only by the reputation of the issuing corporation is called a(n)____________ bond.

Accepted Answer

A)  debenture 
B)  mortgage 
C)  indenture 
D)  preemptive 
E)  treasury 
A)  debenture 
B)  mortgage 
C)  indenture 
D)  preemptive 
E)  treasury

Question 20

You are considering an investment in a municipal bond that has a yield of 4%.Your tax rate is 25%.What is your taxable equivalent yield?

Accepted Answer

A)  0.75% 
B)  3.75% 
C)  4% 
D)  4.25% 
E)  5.33% 
A)  0.75% 
B)  3.75% 
C)  4% 
D)  4.25% 
E)  5.33%

Corporations use bonds

Timothy Calibe is interested in purchasing an ABC bond that pays $60 interest per year.However,similar bonds pay interest of 8%.Approximately how much should Timothy be willing to pay for his ABC bond?

Why do investors purchase corporate bonds?

After you invest,it is important to let the investments manage themselves.

Business failure risk can be due to

Government bonds have a higher potential investment income than stocks.

Municipal bonds generally are only tax-exempt at the state level.

Using suggestions from financial experts like Suze Orman,calculate the amount of your assets that should be invested in growth investments as well as the amount to be invested in safer,conservative investments.Identify your assumptions and show your work.

You are considering an investment in a municipal bond that has a yield of 5%.Your tax rate is 25%.What is your taxable equivalent yield?

Which of the following steps is NOT a factor to be considered before making your first investment?

Which of the following is not a rating agency for bonds?

After you purchase an investment,you should

You are trying to evaluate two bond issues.One bond issue is rated "A" by Moody's; the other is rated "B." How important are the bond ratings issued by Moody's Investors Service? Based on your answer,would you purchase the "A" bond or the "B" bond?

Marissa Christianson is interested in buying a bond whose interest rate is 6% and current quote is 105.What is her current yield?

Identify at least one advantage of investing in a corporate bond.

It isn't important to know how much you owe in order to survive a financial crisis.

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

Assume that you purchase a $1,000 bond issued by GE that pays 5% interest each year.What is the annual interest amount?

A bond that is backed only by the reputation of the issuing corporation is called a(n)____________ bond.

You are considering an investment in a municipal bond that has a yield of 4%.Your tax rate is 25%.What is your taxable equivalent yield?

Personal Financial Planning in Action

Money Management Skills

Taxes in Your Financial Plan

Financial Services: Savings Plans and Payment Account

Consumer Credit: Advantages, Dis-Advantages, Sources, and Costs

Consumer Purchasing Strategies and Wise Buying of Motor Vehicles

Selecting and Financing Housing

Home and Automobile Insurance

Health and Disability Income Insurance

Financial Planning With Life Insurance

Investing in Stocks

Investing in Mutual Funds

Starting Early: Retirement and Estate Planning

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Exam 11: Investing Basics and Evaluating Bonds

Corporations use bonds

Timothy Calibe is interested in purchasing an ABC bond that pays $60 interest per year.However,similar bonds pay interest of 8%.Approximately how much should Timothy be willing to pay for his ABC bond?

Why do investors purchase corporate bonds?

After you invest,it is important to let the investments manage themselves.

Business failure risk can be due to

Government bonds have a higher potential investment income than stocks.

Municipal bonds generally are only tax-exempt at the state level.

Using suggestions from financial experts like Suze Orman,calculate the amount of your assets that should be invested in growth investments as well as the amount to be invested in safer,conservative investments.Identify your assumptions and show your work.

You are considering an investment in a municipal bond that has a yield of 5%.Your tax rate is 25%.What is your taxable equivalent yield?

Which of the following steps is NOT a factor to be considered before making your first investment?

Which of the following is not a rating agency for bonds?

After you purchase an investment,you should

You are trying to evaluate two bond issues.One bond issue is rated "A" by Moody's; the other is rated "B." How important are the bond ratings issued by Moody's Investors Service? Based on your answer,would you purchase the "A" bond or the "B" bond?

Marissa Christianson is interested in buying a bond whose interest rate is 6% and current quote is 105.What is her current yield?

Identify at least one advantage of investing in a corporate bond.

It isn't important to know how much you owe in order to survive a financial crisis.

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

Assume that you purchase a $1,000 bond issued by GE that pays 5% interest each year.What is the annual interest amount?

A bond that is backed only by the reputation of the issuing corporation is called a(n)____________ bond.

You are considering an investment in a municipal bond that has a yield of 4%.Your tax rate is 25%.What is your taxable equivalent yield?

Personal Financial Planning in Action

Money Management Skills

Taxes in Your Financial Plan

Financial Services: Savings Plans and Payment Account

Consumer Credit: Advantages, Dis-Advantages, Sources, and Costs

Consumer Purchasing Strategies and Wise Buying of Motor Vehicles

Selecting and Financing Housing

Home and Automobile Insurance

Health and Disability Income Insurance

Financial Planning With Life Insurance

Investing in Stocks

Investing in Mutual Funds

Starting Early: Retirement and Estate Planning

Filters