Chapter 15 – Investing in Bonds
66. (p. 513) A government security issued in $100 units with maturities of more than one year
but not more than ten years is called a:
67. (p. 513) A government security issued in minimum units of $100 with a 30-year maturity is
called a:
68. (p. 514) Dave Johnson’s objective was to purchase a government bond that provided some
protection against inflation and higher prices. To fulfill this objective, John purchased a:
Chapter 15 – Investing in Bonds
69. (p. 515) A bond backed by the full faith, credit, and unlimited taxing power of the
municipality that issued it is called a ____________ bond.
70. (p. 515) A bond that is repaid from the income generated by the project it is designed to
finance is called a(n):
71. (p. 515) You are a taxpayer in the 28 percent tax bracket and you own a tax-exempt bond
that pays 5 percent. What is your taxable equivalent yield?
Chapter 15 – Investing in Bonds
72. (p. 515) June Tavia is trying to calculate the taxable equivalent yield for a municipal bond. If
the bond she owns pays 4.5 percent interest and she is in the 25 percent tax bracket, what is
the taxable-equivalent yield?
73. (p. 517) Which one of the following statements is false?
Chapter 15 – Investing in Bonds
74. (p. 518) If a bond is quoted in the newspaper at 92, the current price of a $1,000 face value
bond is:
75. (p. 518) If a bond is quoted in the newspaper at 88.75, the current price of a $1,000 face
value bond is:
Chapter 15 – Investing in Bonds
76. (p. 518) Which one of the following statements is true?
77. (p. 518) The price at which a dealer is willing to sell a government security is known as the
____________ price.
78. (p. 520) Which of the following sources can be used by an investor to obtain a corporation’s
annual report?
Chapter 15 – Investing in Bonds
79. (p. 520) The highest bond rating issued by Standard & Poor’s is:
80. (p. 520) The highest bond rating issued by Moody’s is:
81. (p. 520) A corporate bond rated B by Moody’s would be suitable for:
Chapter 15 – Investing in Bonds
82. (p. 520) Which bond rating does Standard & Poor’s assign to a bond that is in default?
83. (p. 521) Generally, U.S. government securities issued by the Treasury Department:
84. (p. 520) According to Moody’s, bonds with extremely poor prospects of attaining any real
investment standing are rated:
Chapter 15 – Investing in Bonds
85. (p. 522) What is the current yield for a $1,000 corporate bond that pays 7 percent and has a
current market value of $800?
86. (p. 522) What is the current yield for a $1,000 corporate bond that pays 7.5 percent and has a
current market value of $950?
Chapter 15 – Investing in Bonds
87. (p. 522) The yield-to-maturity takes into account the relationship among a bond’s maturity
value and the:
88. (p. 522) If a bond is purchased at a price above the face value, the yield to maturity is:
89. (p. 522) If a bond is purchased at a price below the face value, the yield to maturity is:
Chapter 15 – Investing in Bonds
90. (p. 522) Dave Harris has just purchased a bond with a face value of $1,000 that pays 6
percent. The purchase price of the bond was $900, and the bond will mature in 5 years. What
is the yield to maturity for this bond?
91. (p. 501) Dave Harris purchased a single bond last year for $987. He knows he will receive
$1,000 on March 1, 2026. This date is referred to as the ____ date.
92. (p. 502) Which of the following assets owned by a company can be used to secure a
mortgage bond?
Chapter 15 – Investing in Bonds
93. (p. 502) Why do corporations sell bonds?
94. (p. 504) Tom McCallister buys a bond that the company can retire before maturity if they
wish. What type of bond has Tom purchased?
95. (p. 503) Frank Riley just purchased a bond that is unsecured and is secondary to other
unsecured bonds should the issuer declare bankruptcy. What type of bond has Frank
purchased?
Chapter 15 – Investing in Bonds
96. (p. 502) Dick Dowen just bought a bond that is only secured by the full faith and credit of the
issuer. What type of bond has Dick purchased?
97. (p. 503) Doug Emery purchased a bond that can be exchanged for a set number of shares of
the issuer’s common stock. What type of bond has Doug purchased?
98. (p. 520) Which of the following bonds would have the lowest interest rate? All of the bonds
have 10 years to maturity.